A monopolist finds the price-output combination that maximizes its profits by
A. finding the combination for which the difference between marginal revenue and marginal cost is the greatest.
B. equating price and marginal cost.
C. equating total revenue and total cost.
D. equating marginal revenue and marginal cost.
Answer: D
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Drivers are charged a price to use a tollway. But even tollways, such as the Tri-State Tollway near Chicago, become heavily congested during the morning and evening rush hours. Thus,
A) the rush hour represents a surplus of cars. B) your textbook author is wrong in claiming congestion is caused by zero prices. C) higher tolls are required during rush hours to reduce congestion. D) growing population is indeed the problem.
Assuming capital and labor are substitutes, an improvement in technology that affects only the productivity of capital would cause a firm to employ more capital but leave the amount of labor employed unchanged
Indicate whether the statement is true or false
If the Mexican peso (MXN) to Brazilian real (BRL) exchange rate goes from 5.9 MXN/BRL to 5.2 MXN/BRL
A) Brazilians decrease their demand for Mexican goods. B) Brazilians increase their demand for Mexican goods. C) Mexicans decrease their demand for Brazilian goods. D) Not enough information to determine what happens.
If firms pollute when they produce,
a. marginal social cost equals marginal private cost b. marginal private cost exceeds marginal social cost c. marginal social cost exceeds marginal private cost d. marginal social cost equals marginal external cost e. marginal social cost equals marginal private cost, which equals marginal external cost