Refer to the information provided in Table 13.4 below to answer the question(s) that follow.
Table 13.4Price ($)Quantity20.00118.00216.00314.00412.00510.006 8.007Refer to Table 13.4. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $4 per unit of providing the product, then the monopoly maximizes its profits by charging ________ per unit and selling ________ units of output.
A. $16; 3
B. $12; 5
C. $10; 6
D. $18; 2
Answer: B
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On a diagram of the planned expenditure function Ep and the 45-degree line, we find autonomous planned spending
A) where the 45-degree line hits the vertical axis. B) at each level of output by the vertical distance between the Ep and 45-degree lines. C) where Ep intersects the vertical axis. D) at each level of income by the vertical distance from the horizontal axis up to Ep.
The first term in an NPV calculation is usually
A) positive, because firms consider only positive returns. B) positive, because interest charges do not accrue until the second period. C) zero, because interest charges do not accrue until the second period. D) negative, because funds for the project have to be borrowed up front before it is begun. E) negative, because the cost of the project is immediate, but revenue streams from the project come later.
During the 1990s and the first decade of the 2000s
a. polls have shown that U.S. citizens are more concerned about inflation than any other national problem b. the U.S. inflation rate reached double digits (10 percent or higher) c. the U.S. economy consistently experienced deflation (a falling price level) d. the U.S. inflation rate averaged about 8 percent per year e. the U.S. inflation rate averaged less than 3 percent per year
Consider a profit-maximizing monopoly pricing under the following conditions. The profit-maximizing quantity is 40 units, the profit-maximizing price is $160, and the marginal cost of the 40th unit is $120 . If the good were produced in a perfectly competitive market, the equilibrium quantity would be 50, and the equilibrium price would be $150 . The demand curve and marginal cost curves are
linear. What is the value of the deadweight loss created by the monopolist? a. $40 b. $100 c. $200 d. $400