The light bulbs currently made by a manufacturer currently last 1 year. People place a value of $2.42 on one year's worth of light from a light bulb, and the market rate of interest is 10%. The manufacturer is considering a quality improvement that would make its light bulbs last 3 years. Should the manufacturer make the quality improvement?
a. No, because it will substantially reduce the number of light bulbs sold.
b. Yes, as long as it costs less than $2.42 per light bulb.
c. Yes, as long as it costs less than $4.20 per light bulb.
d. Yes, as long as it costs less than $4.84 per light bulb.
c. Yes, as long as it costs less than $4.20 per light bulb.
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In the case of a perfectly price-discriminating monopoly, there is no
A) transfer of consumer surplus to the producer. B) deadweight loss. C) short-run economic profit. D) long-run economic profit.
The number of people that are fired in a month is
A) a stock. B) a flow. C) both a stock and a flow. D) neither a stock nor a flow.
Suppose that a tax is placed on books. If the buyers pay the majority of the tax, then we know that the
a. demand is more inelastic than the supply. b. supply is more inelastic than the demand. c. government has required that buyers remit the tax payments. d. government has required that sellers remit the tax payments.
Suppose that smoking creates a negative externality. If the government imposes a per-cigarette tax equal to the per-cigarette externality, then
a. the after-tax equilibrium quantity of cigarettes smoked will be less than the socially optimal quantity of cigarettes smoked. b. the after-tax equilibrium quantity of cigarettes smoked will be greater than the socially optimal quantity of cigarettes smoked. c. the after-tax equilibrium quantity of cigarettes smoked will equal the socially optimal quantity of cigarettes smoked. d. There is not enough information to answer the question.