B5 - Market Influence on Business Strategies Flashcards
In order to sell at the rate of output in markets controlled by monopolists, price is set where:
Marginal revenue equals marginal cost.
Monopolistic competition is characterized by:
A relatively large group of sellers who produce differentiated products.
An industry that is oligopolistic would be best characterized by:
Significant barriers to entry
The kinked demand curve is associated with:
The analysis of oligopoly
Any business firm that has the ability to control the price of the product it sells:
Faces a downward-sloping demand curve. Only the firm in a competitive market is a price-taker facing a horizontal demand curve at the market equilibrium price.
In competitive markets, an increase in an effective minimum wage will:
Increase unemployment. Employers may elect to hire fewer employees thereby increasing unemployment.
Under pure competition, strategic plans focus on:
Maintaining the market share and being responsive to market conditions related to sales price.
Under monopolist competition, strategic plans focus on:
Maintaining the market share and planning for enhanced product differentiation.
Under monopoly, strategic plans focus on:
Profitability from production levels that maximize profits
Under oligopoly, strategic plans focus on:
Maintaining the market share, ensuring product differentiation, and adapting to changes in price and/or production volume
Product demand is more elastic when:
More substitutes are available
If demand is price inelastic, an increase in price will result in:
An increase in total revenue (positive relationship)
If demand is price elastic, an increase in price will result in:
A decline in total revenue (negative relationship)
If demand is UNIT ELASTIC, a change in price will have:
No effect on total revenue
What is a price ceiling?
A price that is established BELOW the equilibrium price, which causes a shortage to develop.
