The market demand for a monopoly firm is estimated to be:Qd = 100,000 - 500P + 2M + 500PRwhere Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The manager has forecasted the values of M and PR will be $50,000 and $20, respectively, in 2016. The average variable cost function is estimated to beAVC = 520 - 0.03Q + 0.000001Q2Total fixed cost in 2016 is expected to be $4 million. The profit-maximizing level of output for 2016 is
A. 1,000 units.
B. 4,000 units.
C. 5,000 units.
D. 10,000 units.
E. 20,000 units.
Answer: E
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The term that is used to refer to a situation in which one party to a transaction has more or better information than the other party is
A) adverse selection. B) asymmetric information. C) moral hazard. D) deceptive trade practices.
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
The rate at which prices in general are increasing is called the:
A. inflation rate. B. standard of living. C. trade balance. D. unemployment rate.
Use the following general linear demand relation:Qd = 680 - 9P + 0.006M - 4PR where M is income and PR is the price of a related good, R. If M = $15,000 and PR = $20 and the supply function is Qs = 30 + 3P, equilibrium price and quantity are, respectively,
A. P = $6 and Q = 38. B. P = $40 and Q = 250. C. P = $12 and Q = 200. D. P = $50 and Q = 170. E. P = $55 and Q = 195.