In Figure 12.6, airline Fly Smart is initially a secure monopoly between two cities X and Y at point M, serving 300 passengers per day at the profit maximizing price of $300 per ticket. Suppose that Fly Smart discovers that a second airline is contemplating entering the market. If the minimum market entry quantity is zero passengers per day, what is Fly Smart's profit when it commits to the entry-deterring quantity?
A. $60,000
B. $44,400
C. $33,600
D. $0
Answer: D
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
When the Fed extends a $100 discount loan to the First National Bank, reserves in the banking system
A) increase by $100. B) increase by more than $100. C) decrease by $100. D) decrease by more than $100.
Persons whose utility functions are concave with respect to wealth are said to be
A. risk-seekers. B. risk-averse. C. risk-neutral. D. fair gamblers.
The observed variations in practice patterns in different regions of the country is the result of all of the following except one.
a. Patients often prefer a number of different options to treat the same illness and physicians are willing to accommodate these differences. b. The observed variations are due to scientific uncertainty associated with diagnosis and treatment. c. There are many alternative treatment options available for most ailments. d. Practice variations are due to differences in demographics and disease incidence across regions. e. Medical training varies across the country depending on where the physician was trained, and most physicians' practices tend to be in the same regions.