The monopolist determines the price and quantity combination that maximizes short-run profits by
A. finding the quantity at which marginal cost and marginal revenue are equal and then using the demand curve to find price.
B. finding the quantity at which average revenue and average total cost are furthest apart.
C. finding the point at which marginal revenue and demand intersect. This gives the price and quantity that maximizes profits.
D. determining the price by finding the highest price at which sales can be made and then using the demand curve to find the appropriate quantity.
Answer: A
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Which of the following is NOT a reason why collusion may be hard to sustain?
A. Firms observe their rivals' prices only imperfectly. B. Marginal costs, and therefore agreed-upon prices, may differ among firms or products. C. Prices wars in practice may not conform to the predictions of the Bertrand model. D. The potential profits from collusion can be so high as to create an incentive not to undercut.
In discussing the distribution of income among families, the term “lowest fifth” indicates
a. the poorest five percent of families. b. the poorest twenty percent of families. c. the smallest twenty percent of families. d. the percentage of families receiving one-fifth of the income.
A country with plenty of capital and little land may have a comparative advantage in:
A. land-intensive activities. B. capital-intensive activities. C. labor-intensive activities. D. technology-intensive activities.
Many colleges have decided to ban the use of halogen lamps because they are deemed to be a fire hazard. This is an example of which type of solution?
a. creating new property forms b. levying a pollution compensation tax c. creating obligatory controls d. bubble concept, similar to emission standards e. free market efficiency