Suppose Island Bikes, a profit-maximizing firm, is the only bike rental company in a small resort town. The marginal cost to Island Bikes of renting out a bike is $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservations prices are listed in the table. CustomerReservation Price($/Rental)A22B16C12D8E6F4If Island Bikes charges a single price to all of its customers, then what price will it charge?
A. $16
B. $8
C. $4
D. $12
Answer: D
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Use the following graph to answer the next question.
The size of the multiplier associated with changes in government spending in this economy is
A. 3.50. B. 5.00. C. 6.67. D. 2.00.
As the Fed lowers the federal funds rate,
A) the price level falls. B) real GDP decreases. C) aggregate demand increases. D) aggregate supply increases. E) aggregate income decreases.
Which of the following is a gain from trade?
A. A level of self-sufficiency for all trading countries. B. A higher price level for all trading countries. C. A shorter workweek for all trading countries. D. A higher standard of living for all trading countries.
Figure 10-3
In Figure 10-3, the profit maximizing firm will operate at a level of
a.
OJ.
b.
OG.
c.
OI.
d.
OH.