Suppose that Figure 10.4 shows an industry's market demand, its marginal revenue, and the production costs of a representative firm. If the industry was perfectly competitive, a representative firm would charge a price of:
A. $35.
B. $25.
C. $20.
D. $16.
Answer: B
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A company is producing 15,00 . units. At this output level, marginal revenue is $22 and the marginal cost is $18 . The firm sells each unit for $48 and average total cost is $40 . What can we conclude from this information?
a. The company is making a loss b. The company needs to cut production c. The company needs to increase production d. Not enough information is provided
In the context of both positive externalities and public goods, briefly explain why private firms or individuals might fail to make expenditures or investments that would produce broad social benefits.
What will be an ideal response?
Suppose goods A and B are substitutes. If the price of good A increases, will the demand for good B increase or decrease?
Suppose the government raises taxes. Which curves in the aggregate demand and aggregate supply model would be affected, and which way would they shift?