A local video store estimates its average customer's demand per year is Q = 20 ? 4P, and it knows the marginal cost of each rental is $1.00. How much should the store charge for an annual membership in order to extract the entire consumer surplus via an optimal two-part pricing strategy?
A. $40
B. $64
C. $32
D. $20
Answer: C
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a. $20,000 b. $50,000 c. $100,000 d. $125,000
As new firms enter a monopolistically competitive industry, the ________ curve facing each existing firm will shift to the left and become more elastic because there are now ________ substitutes for its product.
A. supply; more B. supply; less C. demand; more D. demand; less
A shift in tastes toward American goods ________ net exports in the U.S. and causes the quantity of aggregate output demanded to ________ in the U.S., everything else held constant
A) decreases; rise B) decreases; fall C) increases; rise D) increases; fall
A firm will hire additional units of any input up to the point where:
a. the marginal productivity of the input is maximized. b. the marginal cost of employing the input is minimized. c. the expense of employing the last unit is equal to the revenue brought in by the last unit. d. the revenue brought in by the input is maximized.