The Exclusive Gift Company has a monopoly over the sale of gold hula hoops. This company is currently pricing and producing where marginal revenue is equal to marginal cost. It is selling 50 gold hula hoops at a price of $5,000 each. Total costs for the company are $300,000 of which fixed costs are $100,000. You are hired as an economic consultant to this company. You should advise this monopolist to
A. produce in the short run and expand capacity in the long run.
B. shut down in the short run but expand capacity in the long run if conditions do not change.
C. produce in the short run but exit the industry in the long run if conditions do not change.
D. shut down in the short run and exit the industry in the long run.
Answer: C
You might also like to view...
The larger the public's currency drain from the banking system, the
A) smaller is the monetary base. B) smaller is the money multiplier. C) larger is the monetary base. D) larger is the money multiplier.
One problem with unrestricted global capital movements is that capital suppliers may
a. have little information about conditions overseas b. react quickly to bad news regardless of economic fundamentals c. be interested in short-run gains rather than development objectives d. all of the above
Over the past century, the main factor responsible for rising living standards in the United States has been productivity growth.
Answer the following statement true (T) or false (F)
What makes countries with fixed exchange rates prone to speculative attacks? Why don't the central banks of these countries stop these attacks?
What will be an ideal response?