Question

223

Some economists have suggested that oligopolists tend to maintain stable prices when there are changes in the demand for their products or in their costs of production. Which of the following models provides an explanation for this type of behavior?

Centralized cartel

Price leadership

Prisoners' dilemma

Kinked demand curve

228

Multinational corporations are often accused that transfer pricing is used for

social responsibility.

profit optimization.

tax and tariff avoidance.

creating unnecessary tension between divisions.

332

An increase in price and decrease in quantity is most likely caused by ______ shift in demand and _____ shift in supply.

no; a leftward

a leftward; no

a leftward, a leftward

a rightward a rightward

333

"Golden parachutes" can correct a potential principal–agent problem when:

Managers are likely to seek goals different from those of the shareholders.

The shareholders are the agents and the managers are the principals.

The shareholders are the principals and the managers are the agents.

There is no explicit linkage between managers' compensation and the profitability of the firm.

Answer 1

223) The answer will be Kinked demand curve- As this curve tells about the hypothesis that a firm faces a demand curve with a kink at the prevailing price level.

228) The transfer pricing is used by the Multinational corporations for tax and tariff avoidance.

332) An increase in price and decrease in quantity is most likely caused by rightward shift in demand and rightward shift is supply.

333) When there is no explicit linkage between managers' compensation and the profitability of the firm the "Golden parachutes" can correct a potential principal-agent problem.