Say a monopolist knew that at the current price for its product demand is inelastic. If marginal costs for this firm are zero, then in order to maximize profits this monopolist should
A. decrease its price.
B. keep output at the same level.
C. reduce output.
D. increase output.
Answer: C
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A firm has $200 million in total revenue and explicit costs of $190 million. If its owners have invested $100 million in the company at an opportunity cost of 10 percent interest per year, the firm's accounting profit is:
a. $400 million. b. $100 million. c. $80 million. d. $10 million. e. zero.
The reserve demand schedule is drawn on a graph that has the quantity of reserves on the horizontal axis and
A. the price level is on the vertical axis. B. the federal funds rate is on the vertical axis. C. the price of bonds is on the vertical axis. D. income is on the vertical axis.
A bank's assets consist of $1,000,000 in total reserves, $2,100,000 in loans, and a building worth $1,200,000 . Its liabilities and capital consist of $3,000,000 in demand deposits and $1,300,000 in capital. If the required reserve ratio is 20 percent, what is the level of the bank's excess reserves? How much could it loan out as a result?
a. $600,000; $600,000 b. $600,000; $3,000,000 c. $400,000; $400,000 d. $400,000; $2,000,000
An increase in taxes will cause the consumption schedule to
a. shift upward. b. shift downward. c. remain fixed as the economy moves upward along the schedule. d. remain fixed as the economy moves downward along the schedule.