Use the following general linear demand relation:Qd = 100 - 5P + 0.004M - 5PRwhere P is the price of good X, M is income, and PR is the price of a related good, R. Income is $100,000, the price of the related good is $20, and the supply function is Qs = 150 + 5P. What is the equilibrium price?
A. $25
B. $30
C. $50
D. $40
E. $35
Answer: A
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Refer to the figure above. If the monopolist faces a constant marginal cost of $6, at what price should it sell its output to maximize profits?
A) $2 B) $6 C) $10 D) $12
Much of the research on the minimum efficient scale suggests that for many firms the LRAC curve is:
A) downward sloping over the relevant range of output. B) upward sloping over the relevant range of output. C) U-shaped. D) flat over a relatively large range of output levels.
In the short run, the perfectly competitive firm will always earn an economic profit when
A) P = ATC. B) P > AVC. C) P = MC. D) P > ATC.
James used $250,00 . from his savings account that paid an annual interest of 15% to purchase a hardware store. After one year, James sold the business for 320,000 . His accountant calculated his profit to be:
a. $320,000 b. $70,000 c. $282,500 d. $32,500