A monopolist faces a demand curve given by P = 20 - Q and has total costs given by TC = Q2. By using a bit of calculus, you should be able to determine that the firm's marginal revenue is MR = 20 - 2Q and its marginal cost is MC = 2Q. Now suppose that the country in which this monopolist is located decides to engage in international trade. The world price of the product produced by the monopolist is $12. The profit-maximizing output level is 6, and the profit-maximizing price equals $12. What are its monopoly profits at this price and quantity?
a. $25
b. $36
c. $50
d. $75
Ans: b. $36
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Suppose an economy has the following production function: Y = A × K1/4 × H3/4. Which of the following is true of this economy?
A) Production in this economy exhibits increasing returns to scale. B) Production in this economy exhibits decreasing returns to scale C) Production in this economy exhibits constant returns to scale. D) Production in this economy decreases when the price level increase.
Suppose there are 100 identical firms producing package delivery services. One of the firms pays a wage rate of $7 and hires 20 delivery workers. The price the firm charges to deliver a package is $10 . We know then that the number of delivery workers in the package delivery industry is
a. 100 workers b. 200 workers c. 700 workers d. 2,000 workers e. 10,000 workers
Which of the following is not an example of a type of factor of production?
a. land b. labor c. government d. capital
The use of government spending and taxation for the purpose of stabilizing the economy is called __________.
Fill in the blank(s) with the appropriate word(s).