A monopolist will operate where
A. MR = MC and charge a price equal to marginal revenue.
B. MR = MC and charge a price equal to marginal cost.
C. MR = MC and charge a price corresponding to demand at that level.
D. MC = MR and charge a price corresponding to average cost.
Answer: C
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Vertical contracts that aim to decrease retailer prices typically
a. Benefit the consumer, hurt the manufacturer and the retailer b. Benefit the manufacturer, hurt the consumer and retailer c. Benefits the consumers, manufacturers and retailers d. Hurts all the manufacturers, consumers and retailers
You are hired as an economic consultant to The Pampered Pet Shop. The Pampered Pet Shop operates in a perfectly competitive industry. This firm is currently producing at a point where market price equals its marginal cost. The market price is less than its average variable cost. You should advise the firm to
A. produce in the short run to minimize its loss, but exit the industry in the long run. B. lower its price so that it can sell more units of output. C. raise its price until it breaks even. D. cease production immediately because it is not covering its variable costs of production.
A recent study on enrollment at a liberal arts college concluded that demand elasticity is 0.91. The administration is considering a tuition increase to help balance the budget. The revenue-maximizing decision is to
A. decrease tuition, which should boost enrollment enough to balance the budget. B. decrease tuition, which would bring in more revenue. C. leave tuition as is—an increase would not help balance the budget. D. increase tuition, which would bring in more revenue.
Suppose there are 100 firms in a market and all are identical. Firm A will hire 20 workers when the wage rate is $10, 25 workers when the wage rate is $9, and 30 workers when the wage rate is $8
The equilibrium wage rate for a number of years has been $9. If the wage rate falls to $8, we know that A) the quantity demanded for the market will increase to 3,000 workers. B) the quantity demanded for the market will increase to more than 3,000 workers. C) the quantity demanded for the market will increase to less than 3,000 workers. D) the quantity demanded for the market will increase, but we can't tell which of the above answers is correct.