You are the manager of a Mom and Pop store that can buy milk from a supplier at $3.00 per gallon. If you believe the elasticity of demand for milk by customers at your store is ?4, then your profit-maximizing price is:
A. $2.50.
B. $5.00.
C. $2.00.
D. $4.00.
Answer: D
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A firm is a monopoly if
a. it faces a demand curve for its product that equals market demand. b. it is a very large firm. c. it takes its rivals' actions into account when choosing its price and output levels. d. its production decisions do not affect the price of its product.
In the United States, out-of-pocket spending on health care per person
A) has remained fairly steady since 1965. B) has been rising since 1965. C) fell from 1965 through 1995, then began to rise from 1995 to the present. D) has been falling since 1965.
Suppose that there is a negative aggregate demand shock and the central bank commits to an inflation rate target. But if the commitment is not credible, then
A) the public's expected inflation will remain unchanged. B) the short-run aggregate supply curve will rise. C) economic contraction will be worse. D) all of the above. E) both B and C.
Government spending can ____________ certain elements of long-term growth
a. discourage b. negate c. encourage d. compromise