Suppose the president of a textbook publisher argues that a 10 percent increase in the price of textbooks will raise total revenue for the publisher. It can be concluded that the company president thinks that demand for textbooks is:
A. unitary elastic.
B. inelastic.
C. elastic.
D. perfectly inelastic.
Answer: B
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When weighing the efficiency of monopolistic competition, which of the following should be considered?
i. The information provided by advertising ii. Product variety iii. The extra cost of excess capacity A) ii only B) i and iii C) ii and iii D) i, ii, and iii E) iii only
All ________ economies have been political dictatorships
A) mixed B) centrally planned C) market D) mixed and market
Suppose that in a market for used cars, there are good used cars and bad used cars (lemons). Consumers are willing to pay as much as $6,000 for a good used car but only $1,000 for a lemon
Sellers of good used cars value their cars at $5,000 each and sellers of lemons value their cars at $800 each. Buyers cannot tell if a used car is reliable or is a lemon. Based on this information, what is the likely outcome in the market for used cars? A) Most used cars offered for sale will be lemons. B) Both good used cars and lemons will sell for $4,500 each. C) Only lemons will sell, for $800 each. D) Both good used cars and lemons will sell for $1,000 each.
Figure 11-7
The firm in Figure 11-7 is an unregulated monopolist; it will produce which of the following?
a.
175 units at a price of 7
b.
100 units at a price of 6
c.
100 units at a price of 9
d.
150 units at a price of about 7.5