Dan is the owner of a price-taking company that manufactures sporting goods. One particular facility Dan owns produces baseball bats and baseball gloves. His cost function for baseball bats is CB(QB, QG) = 100QB + QB2 + QBQG and the marginal cost is MCB = 100 + 2QB + QG, where QB is the output level for bats and QG is the output level for gloves. Dan's cost function for baseball gloves is CG(QB, QG) = 50QG + QG2 + QGQB, and the marginal cost is MCG = 50 + 2QG + QB. The price of a baseball bat is $240 and the price of a baseball glove is $150. If he only produced gloves, what would Dan's profit be if he produces the profit-maximizing quantity?
A. $2,000
B. $2,200
C. $2,500
D. $3,100
C. $2,500
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Publishers charge much higher prices for a book in hardcover than for the same book in paper cover because
A) the demand for hardcover books is less elastic at the same price. B) the marginal cost of attaching hardcovers is very high. C) there are larger sunk costs in the production of hardcover editions. D) they have less bargaining power against bookstores in marketing paperback editions. E) they want to subsidize students.
Traffic lights would be considered:
A. a common resource. B. a private good. C. a public good. D. an artificially scarce good.
Which of the following statements is true?
a. There is no single correct strategy for economic growth and development. b. In general, GDP per capita is highly correlated with alternative quality of life measures. c. The World Bank is affiliated with the United Nations and makes long-term low-interest loans to LDCs. d. All of these.
For a firm in a perfectly competitive market, if it produces where marginal cost exceeds marginal revenue it:
A. is impossible to tell if it is actually maximizing profits. B. should increase production to increase profits. C. should cut back production to increase profits. D. is producing a profit-maximizing quantity.