Use the Table for the Question(s)below

question 40

Multiple Choice

Use the table for the question(s) below.
Luther Corporation Consolidated Income Statement Year ended 30 June (in $ millions)

-Refer to the income statement above. Luther's net profit margin for the year ending 30 June 2017 is closest to:

• A)16.7%
• B)1.8%
• C)5.4%
• D)2.7%

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Definitions:

Kinked Demand Curve

A market theory that suggests prices have a tendency to remain stable because competitors will match price decreases but not price increases.

Cutthroat Competition

An extremely competitive market situation where competitors use aggressive tactics to undercut each other's prices, leading to very low profit margins.

Sticky Prices

A situation in economics where the prices of goods and services are slow to respond to changes in the supply and demand.

Herfindahl-Hirschman Index

A measure of market concentration to assess the level of competition within an industry.