Suppose a monopolist has TC = 100 + 10Q + 2Q2, and the demand curve it faces is p = 90 - 2Q. What will be the price, quantity, and profit for this firm?
What will be an ideal response?
First, determine MR = 90 - 4Q. Second, MC = 10 + 4Q. Setting MR = MC yields
90 - 4Q = 10 + 4Q. Rearranging yields 80 = 8Q or Q = 10. Price equals 90 - 2(10 ) = 70. Total revenue = 70 ∗ 10 = 700. Total cost equals 100 + 10(10 ) + 2(102 ) = 400. Profit equals
700 - 400 = 300.
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Although a corporation that is owned by its member banks, the Federal Reserve System
A. reports directly to the president in an annual report. B. is quite independent of them, and they receive almost none of the Fed’s profits. C. is administered by Congress and all its profits are distributed to the member banks. D. turns all its profits over to the state governments of each district bank.
The Coase Theorem implies that the reason people sue each other in court is that transactions costs are too high.
Answer the following statement true (T) or false (F)
__________ are never borrower-spenders
A) Governmental bodies B) Business firms C) Households D) All of the above can be borrower-spenders.
On October 6, 1979, the Federal Reserve abandoned the strategy of targeting the Federal funds rate and focused on target ranges for growth in the monetary aggregates. Since that time, the Federal Reserve
a. has never deviated from that strategy. b. gave up on interest rate targeting. c. deviated from target ranges for growth in the monetary aggregates when inflation and unemployment were high. d. None of the above