Esmerelda's Egg Emporium is a monopolistically competitive firm. Its marginal revenue curve ________ its demand curve, intersecting the quantity axis ________ the point at which the demand curve intersects it.
A. lies above; twice as far out as
B. lies below; midway between the origin and
C. is the same as; exactly at
D. lies above; midway between the origin and
Answer: B
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Suppose a monopolist's demand curve is P = 60 - Q, and its cost function is C = 10Q + 50 so its marginal cost is 10. If a governmental agency wished to set the price that maximized social welfare, that price would be
A) $10.00. B) $11.02. C) $14.57. D) $35.00.
Suppose it is discovered that consumption of butter leads to a longer life. This information would lead to
A) an increase in quantity demanded. B) an increase in demand. C) a decrease in quantity demanded. D) a decrease in demand.
If the reserve ratio is 8 percent, then the money multiplier is
a. 12.5. b. 11.5. c. 13.5. d. 8.
Refer to the accompanying figure. Assume demand remains unchanged at D1. If supply shifts from S2 to S1, then the equilibrium price will ________ and the equilibrium quantity will ________.
A. rise; fall B. fall; rise C. fall; fall D. rise; rise