Total fixed cost is
A) the cost of buying and installing new machinery.
B) the cost that does not change as output changes.
C) the expenditure on imported raw materials.
D) the wages paid to consultants.
Answer: B
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A monopolist has determined that at the current level of output the price elasticity of demand is -0.15. Which of the following statements is true?
A) The firm should cut output. B) This is typical for a monopolist; output should not be altered. C) The firm should increase output. D) None of the above is necessarily correct.
Suppose the price of cheese rises. In the market for pizza, one would expect that
A) the supply of pizza would increase, and the price would fall. B) the demand for pizza would increase, and the price would increase. C) the demand for pizza would decrease, and price would fall. D) the supply of pizza would decrease, and price would rise.
Left to itself, a natural monopoly will produce
a. nothing b. the efficient level of output c. the quantity at which marginal cost equals marginal revenue d. the quantity at which the marginal cost and demand curves intersect e. the quantity at which the long-run average total cost and demand curves intersect
People have become more concerned about the negative health effects of eating carbohydrates and fat. Considering these effects only, which of the following best describes the likely effect of this trend on the market for high-carb, high-fat snacks?
A. Demand and supply both shifted to the left leading to a decline in equilibrium price and quantity. B. Demand shifted to the left leading to a decline in equilibrium price and quantity. C. Quantity demanded fell leading to a decline in equilibrium price and quantity. D. Supply shifted to the left leading to a rise in equilibrium price and a decline in equilibrium quantity.