Tara runs the only one-hour photo lab for 300 miles around, in an isolated west Texas town. Her lab technician explains to Tara that she is not producing the level of output that would minimize her average total costs. The lab technician tells her that
she should lower her price in order to increase her number of customers. Tara rejects her technician's analysis. Why doesn't she take her technician's advice?
Tara has a monopoly in one-hour photo processing, and monopolists do not care whether or not they
minimize their average total cost. Tara's goal is to maximize profit. As long as she can maximize profit, she
doesn't care whether or not she minimizes average total cost.
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A computer sells for $800 in the United States and for 600 British pounds in England. Given an exchange rate of 0.65 British pounds = $1, how do the computer prices of these countries compare?
a. The computer sells for the same price in both countries. b. The computer costs $923 more in the United States. c. The computer costs $95 more in England. d. The computer costs $124 less in the United States. e. The computer costs $124 less in England.
Use the following figure to answer the next question.
At which point is marginal cost (MC) at its minimum?
A. Point A B. Point B C. Point C D. Point D
What is rent seeking?
What will be an ideal response?
The cross-price elasticity of demand between good X and good Y is -3. Given this information, which of the following statements is true?
A. The demand for goods X and Y is elastic. B. Goods X and Y are complements. C. Goods X and Y are substitutes. D. The demand for goods X and Y is income elastic.