Suppose that the inverse demand for a downstream firm is P = 150 ? Q. Its upstream division produces a critical input with costs of CU(Qd) = 5(Qd)2. The downstream firm's cost is Cd(Q) = 10Q. When there is no external market for the downstream firm's critical input, the downstream firm should produce:
A. 14 units.
B. 11.67 units.
C. 12.5 units.
D. 15 units.
Answer: B
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A. it is technologically efficient to do so. B. it can increase a firm's ability to extract consumer surplus. C. it can increase a firm's profits. D. All of these are reasons firms bundle their products.
The government budget constraint says that ________
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Assume the economy is experiencing a recessionary gap. Keynesian economists would support which of the following policies:
a. Nonstabilization b. Expansionary c. Nonintervention d. Fixed wage
Carl is considering attending a concert with a ticket price of $35 . He estimates that the cost of driving to the concert and parking there will total an additional $20 . In order to attend the concert, Carl will have to take time off from his part-time job. He estimates that he will lose 5 hours at work, at a wage of $6 per hour. Carl's opportunity cost of attending the concert equals
a. $35 b. $55 c. $30 d. $65 e. $85