The Karaoke Channel Online streams professional-grade karaoke for $9.95 a month. Suppose Karaoke Channel Online has a constant marginal cost of $1 per customer and total fixed cost is $20,000. The profit maximizing number of customers is 10,000
Several competitors start to advertise online. Karaoke Channel Online now spends $5,000 a month on advertising and the profit maximizing number of customers increases to 12,000. What is Karaoke Channel Online's average total cost before the advertising begins? A) $3
B) $2
C) $1
D) $2.66
A
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For voluntary action to correct an externality
A) transaction costs have to be high. B) transaction costs have to be low. C) transaction costs have to be split evenly between all of the parties involved. D) transaction costs are irrelevant.
One of the major insights by economist John Maynard Keynes about production was that:
A. firms may not produce all they can at a given price, but what they can sell. B. firms generally produce as much as they can at a given price. C. government spending needs to be kept in check in order for the economy to operate efficiently. D. household spending patterns don’t really influence the health of the economy.
A tax on the buyers of coffee will
a. increase the price of coffee paid by buyers, increase the net price of coffee received by sellers, and increase the equilibrium quantity of coffee. b. decrease the price of coffee paid by buyers, increase the net price of coffee received by sellers, and decrease the equilibrium quantity of coffee. c. increase the price of coffee paid by buyers, decrease the net price of coffee received by sellers, and decrease the equilibrium quantity of coffee. d. increase the price of coffee paid by buyers, decrease the net price of coffee received by sellers, and increase the equilibrium quantity of coffee.
If the marginal cost of pollution abatement differs across firms, then regulations that require all polluters to reduce pollution by a fixed proportion will be:
A. fair to all polluters. B. ineffective. C. inefficient D. efficient.