A monopolist has set her level of output to maximize profit. The firm's marginal revenue is $20, and the price elasticity of demand is -2.0. The firm's profit maximizing price is approximately:
A) $0
B) $20
C) $40
D) $10
E) This problem cannot be answered without knowing the marginal cost.
C
You might also like to view...
Real world economic data supports the view that higher interest rates are associated with ________
A) higher saving and consumption B) lower saving and higher consumption C) higher saving and lower consumption D) lower saving and consumption
Distorting taxes can invalidate Ricardian equivalence because
A) they confuse consumers about the need for government to repay its debt. B) alternative ways of collecting the same tax revenue produce different amounts of lost welfare. C) they are inferior to lump-sum taxes. D) they are more popular, politically, than lump-sum taxes.
If a nation has a higher level of technology than another nation it can produce:
A. more outputs with the same level of physical capital. B. less with the same amount of physical capital. C. more with no use of human capital. D. the same output with the same level of inputs.
As firms raise output in response to rising aggregate demand,
a) resources become scarce, wages eventually rise, and a point is reached beyond which output cannot expand b) they become increasingly efficient and are thus able to pass the cost savings on to consumers in the form of lower prices c) real wages fall, interest rates rise, and consumers buy less d) they hire fewer workers and substitute capital for labor e) the level of nominal GDP falls, though real GDP rises