Currently, a monopolist's MR = $5 and its MC = $10 and it serves 10 consumers. An 11th consumer walks in. Should the company provide service to the additional customer?
A. Yes, MC is equal to the number of customers, so it should provide service to the additional customer.
B. No, MR < MC, so it should not provide service to the additional customer.
C. No, MR is less than the number of customers, so it should not provide service to the additional customer.
D. Yes, MR < MC, so it should provide service to the additional customer.
Answer: B
You might also like to view...
Refer to the table above. What is Seller 3's producer surplus?
A) $1 B) $2 C) $3 D) $4
Suppose that Kara values a hot fudge sundae at $6 and Stacia values one at $5 . The pretax price of a hot fudge sundae is $3 . The government imposes a $1 tax on hot fudge sundaes, which raises the price to $4 . What is the deadweight loss from the tax?
If a monopolist is producing a level of output at which demand is inelastic, then
A. the firm is not maximizing profit. B. marginal revenue is positive. C. total revenue will decrease if the firm produces more output. D. both a and b E. both a and c
Every five? years, the Bureau of Economic Analysis? (BEA) revises past GDP figures and the methodology involved in computing national income. In June? 2013, the BEA decided to increase the weighting given to the creation of intellectual property in the national income accounts. This means that the intellectual property involved in the creation of? books, movies,? photographs, and even greeting cards will be included in GDP.? Moreover, the initial cost of producing intellectual property will be treated as a capital investment and future flows of revenue from the book or TV show will be added later on. What are the possible difficulties that the BEA could face with this new? approach?
A. Identifying the qualifying expenditures that lead to the creation of the intellectual property. B. Deciding how broadly or narrowly to define the concept of intellectual property. C. Separating the effect of intellectual property on growth and productivity from the effect of real tangible assets. D. All of the above. E. A and B only.