A firm with market power has an individual consumer demand of Q = 20 ? 4P and costs of C = 4Q. What is optimal price to charge for a block of 20 units?
A. $36
B. $18
C. $90
D. $72
Answer: B
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Which of the following statements about private and social costs is TRUE in the presence of negative externalities created by pollution?
A) Competitive market produces excessive pollution. B) The optimal amount of pollution is zero. C) Social costs exclude externalities. D) Social producer surplus exceeds private producer surplus.
If the Federal Reserve purchases a $2,000 bond from a bond dealer who deposits the check in a bank, what changes will occur on that bank's balance sheet?
a. Reserves, demand deposits, total assets, and total liabilities will all increase by $2,000. b. Reserves and assets will increase by $2,000 . demand deposits and total liabilities will decrease by $2,000. c. Reserves and total assets will decrease by $2,000 . demand deposits and total liabilities will increase by $2,000. d. Reserves and total liabilities will decrease by $2,000 . demand deposits and total assets will increase by $2,000. e. Reserves and assets will increase by $2,000 . demand deposits and total assets will decrease by $2,000.
Traditionally, the Federal Reserve can give emergency loans only to
A. manufacturing firms. B. securities firms. C. commercial banks. D. investment banks.
With an MPS of .2, the MPC will be:
a. .8 b. .3 c. 1.2 d. 5