The chief executive officer of a monopoly firm gives a directive to his production managers to maximize the per unit profit for the upcoming fiscal year. Evaluate the economic wisdom of this advice
What will be an ideal response?
The goal for any firm should be to maximize total profits, not average profit. It's quite possible and probable that if the firm were to maximize per unit profit it might not be maximizing total profit. In short the advice of the CEO is not economically sound.
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Total revenue increases if the price of the good
A) rises and demand is elastic. B) rises and demand is inelastic. C) rises and demand is unit elastic. D) falls and supply is inelastic. E) falls and demand is unit elastic.
A problem with pollution charges or taxes as a solution to pollution is that
A) people don't want the government to regulate industry. B) the necessary information about the polluting industry is costly and usually unavailable. C) taxes are already too high. D) pollution would still continue. E) the producers do not want the property right to their pollution.
A monopsonist:
A. faces a downward-sloping demand curve and by lowering the quantity he sells, he can charge more. B. faces a horizontal demand curve and by raising price, he will lose all of his consumers. C. faces an upward-sloping supply curve and by lowering the quantity he buys, he can pay less. D. faces a downward-sloping supply curve and by increasing the quantity he buys, he can pay less.
The federal personal income tax was designed to be a:
a. progressive tax. b. regressive tax. c. proportional tax. d. poll tax. e. payroll tax.