Author Question: In the kinked demand curve model, if one firm reduces its price A) other firms will also reduce ... (Read 87 times)

natalie2426 · **on:** Jul 1, 2018

In the kinked demand curve model, if one firm reduces its price

A) other firms will also reduce their price.
B) other firms will compete on a non-price basis.
C) other firms will raise their price.
D) Both A and B are correct.
E) Both B and C are correct.

Question 2

Firefighters are highly skilled workers who are typically employed by city governments. If a city reduces the wage rate paid to firefighters to be less than the equilibrium wage rate, what happens to the economic rents earned by the firefighters?

A) Increase
B) Decrease
C) Remain unchanged
D) Public employees like firefighters cannot earn economic rents