Suppose that Tom bought a bike from Helen for $195. If Helen's reservation price was $185, and Tom's reservation price was $215, the total economic surplus from this transaction was:
A. $195
B. $30
C. $215
D. $185
Answer: B
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If the U.S. Postal Service raised its first-class postage rate by 10 percent and found (to its surprise) total receipts from first-class mail service subsequently increased by 10 percent, the demand for first-class mail service would be
A) completely elastic. B) completely inelastic. C) greater than anticipated. D) unit elastic. E) upward sloping.
Eli Whitney III receives a patent for the rayon gin, a product for which there are no close substitutes. Eli will maximize his profit when
a. MR is maximized b. MR = MC c. MR > MC d. MR < MC e. P = MR > MC
Jane wants to buy a beautiful doll as a gift for her sister's birthday. She knows that the same product is offered in different shops with prices of $120, $100, and $80 with odds of one-third of finding each price. She just stopped at a shop and knows that the price is $100. Suppose that there is a search cost of $5 for each search. Should she search one more time?
A. She should toss a coin. B. Yes C. No D. Insufficient information to determine.
Refer to the information provided in Figure 15.6 below to answer the question(s) that follow.
Figure 15.6Refer to Figure 15.6. If Trollio?s T-shirts is producing the quantity where MR = MC and selling each T-shirt at the price where D = ATC, then in the long run this firm should ________ the selling price and ________ quantity.
A. increase; decrease B. decrease; increase C. not change; not change D. increase; increase