When the demand curve is a downward sloping straight line, the slope of the marginal revenue curve is
A. the same as the slope of the demand curve.
B. always equal to one.
C. half as steep as the demand curve.
D. twice as steep as the demand curve.
Answer: D
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Describe the bargaining process between the refineries and the recreational water users, assuming the refineries have the right to pollute.
Use the following graph of the refined petroleum market to answer the questions below.
A college student decides to spend the afternoon watching three movies rented from Red Box. The cost of each movie is $1. The student was willing to pay $4 to rent each of the first two movies and $2 to rent the third movie. What was the marginal benefit received by the student when renting the 2nd movie?
A. $1 B. $8 C. $4 D. $2
IBM and Sara Lee are two of the biggest firms in the United States, but they produce different products. Could they legally merge, or would their merger be struck down by the courts?
Suppose that Company A's railroad cars pass through Farmer B's corn fields. The railroad causes an externality to the farmer because the railroad cars emit sparks that cause $1,500 in damage to the farmer's crops. There is a special soy-based grease that the railroad could purchase that would eliminate the damaging sparks. The grease costs $1,200 . Suppose that the railroad is not liable for any
damage caused to the crops. Assume that there are no transaction costs. Which of the following characterizes an efficient outcome? a. The railroad will continue to operate but will pay the farmer $1,500 in damages. b. The railroad will purchase the grease for $1,200 and pay the farmer nothing because no crop damage will occur. c. The farmer will incur $1,500 in damages to his crops. d. The farmer will pay the railroad $1,200 to purchase the grease so that no crop damage will occur.