Assignment 6

Assignment 6 - Econ 110 L2 Name:_ Spring, 2011 Student ID...

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Econ 110 L2 Name:____________ Spring, 2011 Student ID #:________________ Homework Assignment #6 Due on May 12 Thursday before 11:50am in room 2394 I. Multiple choices (5 points each, 20 points total) 1. The kinked demand curve model is based on the assumption that each firm believes that A) if it raises its price, other firms will raise their prices. B) if it cuts its price, other firms will not lower their prices. C) if it cuts its price, the other firms will lower their prices. D) it is unable to raise its price. 2.  One prediction of the kinked demand curve model is that A) the firm's price will increase more than its costs do. B) the firm's price will not change in response to small changes in cost. C) the price will remain below the kink in the demand curve. D) output will increase faster than price does. 3. In the dominant firm model of oligopoly, the dominant firm A) fills whatever part of the market is left after the other firms establish a competitive price. B) has no cost advantage over other firms so it must treat them as serious competitors.
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This note was uploaded on 06/16/2011 for the course ECON 110 taught by Professor Tan during the Spring '07 term at HKUST.

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Assignment 6 - Econ 110 L2 Name:_ Spring, 2011 Student ID...

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