Suppose a monopoly firm has an annual demand function of Qd = 20,000 - 250P, annual variable costs of VC = 16Q + 0.002Q2 and marginal cost of MC = 16 + 0.004Q, where Q is the annual quantity of output. In addition, the firm has an avoidable fixed cost of $25,000 per year. If this firm maximizes its profit, what is the value of its producer surplus?
A. $156,500
B. $181,500
C. $242,000
D. $217,000
A. $156,500
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Productive efficiency refers to
A. setting TR = TC. B. maximizing profits by producing where MR = MC. C. cost minimization, where P = minimum ATC. D. production at a level where P = MC.
Monetary neutrality refers to the fact that changes in the money supply
A) affect output more in the long run than in the short run. B) have no effect on output in the long run. C) affect only output in the long run. D) have a greater effect on prices in the short run than in the long run.
Price doesn't change in a market-day supply curve
Indicate whether the statement is true or false
An assumption underlying indifference curve analysis is that MUx/MUy ________ as less of X and more of Y is consumed.
A. decreases B. remains constant C. always equals one D. increases