Big Waves is a large water park. Suppose the individual demand for entrance into Big Waves is Qd = 50 - (2 × P) and each consumer has the same demand. Big Waves has a constant marginal cost of $5 per consumer. If Big Waves charges a single entry price to each consumer, what is the profit-maximizing number of entries per consumer?
A) 10 B) 25 C) 20 D) 50
C) 20
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When Federal Reserve Banks add to their holdings of government securities,
A) commercial banks must reduce their net lending. B) commercial bank reserves increase. C) the Fed is extending less credit to the economy. D) the stock of money declines.
The market supply of labor curve has a positive slope if higher wages induce households to choose
A) leisure rather than supplying labor in the labor market. B) supplying labor in the labor market rather than leisure. C) demanding labor rather than supplying it. D) None of the above answers is correct.
How does the principal-agent problem increase the possibility of moral hazard?
What will be an ideal response?
Billy is considering the purchase of a rental house. The house costs $240,000 and it will generate annual revenues of $15,000 and annual expenses of $3,000
Nevertheless, Billy will need to borrow $240,000 at an interest rate of 7% per year in case he decides to make this investment. Should Billy purchase this house? A) No, he will lose money. B) Yes, his profits will be zero. C) No, his profits will be positive but close to zero. D) Yes, he will profit from this investment.