Under which of the following situations would a monopolist increase profits by lowering price (and increasing output):
A. if it discovered that it was producing where MC = MR.
B. if it discovered that it was producing where its MC curve intersects its demand curve.
C. if it discovered that it was producing where MC < MR.
D. under none of these circumstances because a monopolist would never lower price.
Answer: C
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In the long run, firms in a competitive market
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Nancy is considering forming a 5 year business partnership with Claudia. Nancy believes her portion of the partnership will generate the following profits:
Year Profits Present Value 1 $2,000 2 $4,000 3 $12,000 4 $15,000 5 $18,000 Nancy's appropriate discount rate is 6%. To join the partnership, Nancy needs to invest $30,000. Does the partnership offer a rate of return in excess of 6%?
What options have been suggested for shoring up the finances of Social Security and Medicare? Why are they unpleasant ones to consider?
What will be an ideal response?