The monopolist faces a downward sloping demand curve, and maximizing profits requires the monopolist to
A) accept the market price for its product.
B) will produce where the demand curve is inelastic.
C) search for the price consistent with producing to the point at which marginal revenue equals marginal cost.
D) search for the highest possible price consistent with maximizing its revenues, irrespective of its explicit and implicit opportunity costs.
Answer: C
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Consumer surplus is the:
a. amount by which the quantity supplied of a good exceeds the quantity demanded of a good. b. measure of consumes' willingness to buy a good plus the price of the good. c. measure of how much consumers value a good. d. amount consumers are willing to pay for a good minus the amount the consumers actually pays for it.
Socially inefficient outcomes may occur in markets where there are: a. negative externalities present
b. asymmetric information problems present. c. positive externalities present. d. any of the above.
An upward-sloping labor supply curve reflects the
a. higher wage rate that must be paid to meet workers' opportunity costs b. lower wage rate that is paid to meet workers' opportunity costs c. increased willingness of firms to hire the labor supplied at increasing wage rates d. fact that not all workers are equally productive e. higher marginal productivity of the additional worker supplied
The hostage taking example was developed by
A) John Nash. B) Kydland and Prescott. C) John Harsanyi. D) Reinhard Selten.