Dan is the owner of a price-taking company that manufactures sporting goods. One particular facility Dan owns produces baseball bats and baseball gloves. His cost function for baseball bats is CB(QB, QG) = 100QB + QB2 + QBQG and the marginal cost is MCB = 100 + 2QB + QG, where QB is the output level for bats and QG is the output level for gloves. Dan's cost function for baseball gloves is CG(QB, QG) = 50QG + QG2 + QGQB, and the marginal cost is MCG = 50 + 2QG + QB. The price of a baseball bat is $240 and the price of a baseball glove is $150. What is the profit-maximizing sales quantity for baseball gloves?
A. 10
B. 20
C. 30
D. 60
B. 20
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A) between 20 and 30 percent B) a vast majority C) roughly half D) less than 1 percent
Explain two concepts of central bank independence. Is the Fed politically independent? Why do economists think central bank independence is important?
What will be an ideal response?
Which of the following is true of consumer surplus?
A. It is used to measure the impact of a change in price on the economic well-being of the producers. B. It is the net gain in economic well-being associated with producing and selling the equilibrium quantity of a good. C. It is the difference between the value that one places on a good and the price paid for the good. D. It is graphically represented as the area under the equilibrium price and above the supply curve of a good.
When an oligopoly is in a Nash equilibrium
A) firms have colluded to set their prices. B) firms will not behave as profit maximizers. C) a firm will not take into account the strategies of its rivals. D) a firm will choose its best pricing strategy, given the strategies that it observes other firms have taken.