Question

QUESTION 38 Assumptions that underlie the Resource-based View include a. Resource heterogeneity b. Resource immobility c. Barriers to entry d. Both a and b QUESTION 39 Diminishing marginal productivity implies a. decreasing average costs b. increasing marginal costs c. decreasing total costs d. decreasing marginal costs QUESTION 40 A monopoly has a. A perfectly elastic demand curve b. A less elastic demand curve than a competitive firm c. An inelastic demand curve d. A perfectly elastic supply curve Clic! San

Answer 1

Solution:

Q38. Resource-based View follow two main assumptions about resources. They are that resources must be heterogeneous and immobile. Among given options, both (a) and (b) mark the correct assumptions. Thus, correct option is (d) Both a and b.

Q39. Marginal productivity being diminishing implies that the additional productivity and efficiency generated by an input lowers and more and more of that input is used. The three options mainly talk of decreasing costs (average, marginal and total), but lower cost can logically never lead to lower efficiency. In fact it means the opposite: it is efficient to generate more product with lower cost. Correct option here is (b) increasing marginal costs, which increases additional cost for each input hired, lowering the productivity.

Q40. For a competitive firm, even slight increase in price charged by it can lead the quantity demanded to fall largely as the competition prevails, and buyers have many sellers to buy from. That is, for slightest change in prices, quantity demanded changes substantially, resulting in (nearly, theoretically) per elastic demand curve. Under monopoly on the other hand, there being single seller of good, buyers do not have other options to buy from, so a price change do not impact quantity demanded too highly. However, the demand curve is downward sloping, as some demand do change depending on the type of good. So, demand curve under monopoly is relatively less elastic than under a competitive firm. So, correct option is (b).