The correct answer is A. a-1, b-4, c-3, d-2.
a. Dumping is the practice of selling goods in a foreign market at a price below cost. It is often done to gain market share or to drive competitors out of business.
b. A kinked revenue curve is a type of demand curve that is kinked at the current price. This occurs when firms in an oligopoly have a fear of retaliation from their rivals if they raise prices.
c. A horizontal straight line revenue curve is a type of demand curve that is perfectly elastic. This occurs when firms in a perfectly competitive market have no control over the price of their goods.
d. A large number of buyers and sellers with differentiated goods is a characteristic of monopolistic competition. In this market structure, firms have some control over the price of their goods, but they also face competition from other firms that offer similar products.
Here is a more detailed explanation of each option:
- a. Dumping is the practice of selling goods in a foreign market at a price below cost. It is often done to gain market share or to drive competitors out of business. Dumping can be harmful to domestic producers in the foreign market, as it can lead to job losses and plant closures.
- b. A kinked revenue curve is a type of demand curve that is kinked at the current price. This occurs when firms in an oligopoly have a fear of retaliation from their rivals if they raise prices. If a firm raises its price, its rivals may not follow suit, and the firm will lose market share. On the other hand, if a firm lowers its price, its rivals are likely to follow suit, and the firm will not be able to increase its profits. This can lead to a situation where firms in an oligopoly are reluctant to change their prices, even if market conditions change.
- c. A horizontal straight line revenue curve is a type of demand curve that is perfectly elastic. This occurs when firms in a perfectly competitive market have no control over the price of their goods. The demand curve for a perfectly competitive firm is perfectly elastic because consumers are indifferent between the goods of different firms. If a firm raises its price, consumers will simply buy from another firm that is selling the same good at a lower price.
- d. A large number of buyers and sellers with differentiated goods is a characteristic of monopolistic competition. In this market structure, firms have some control over the price of their goods, but they also face competition from other firms that offer similar products. This competition forces firms to differentiate their products in order to attract customers. Differentiation can take many forms, such as branding, advertising, and product features.