To sell one more unit of a good, a monopolist must
A) lower the price on the last unit only.
B) lower the price on all units.
C) raise the price only on the last unit sold.
D) raise the prices on all goods.
Answer: B
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Which of the following is an example of pure bundling?
A) a pair of pants B) a pizza and beer lunch combo C) an automobile D) All of the above.
Which of the following statements demonstrates an understanding of the importance of sunk costs for decision making?
I. "Even though I hate my MBA classes, I can't quit because I've spent so much money on tuition." II. "To break into the market for soap our firm needs to spend $10M on creating an image that is unique to our new product. When deciding whether to develop the new soap, we need to take this marketing cost into account." A) I only B) II only C) Both I and II D) Neither I nor II
If total profit is at a maximum, then average profit is zero
a. True b. False Indicate whether the statement is true or false
Why is it better to protect an infant industry with monopoly power with a tariff than a quota?
a. A tariff causes domestic production to increase, whereas a quota causes production to decrease. b. A tariff causes domestic production to decrease, whereas a quota causes domestic production to increase. c. A tariff will raise the domestic price above the world price, whereas a quota will not. d. A quota will raise the domestic price above the world price, whereas a tariff will not.