The diagram below shows Spencer's annual demand for videos. Spencer currently rents videos from Blockpopper's, which charges $2.50 per rental.
(i) How many videos does Spencer rent each year? How much consumer's surplus does Spencer receive from renting videos?
(ii) Blockpopper's starts a "frequent viewers" club. For a membership fee of $35 per year, club members can rent as many videos as they wish at the discounted price of $2 per rental. Should Spencer join the "frequent viewers" club? If yes, how much surplus value would Spencer receive as a club member? If no, what membership fee would Spencer be willing to pay to join the club?
(i) How many videos does Spencer rent each year? How much consumer's surplus does Spencer receive from renting videos?
(ii) Blockpopper's starts a "frequent viewers" club. For a membership fee of $35 per year, club members can rent as many videos as they wish at the discounted price of $2 per rental. Should Spencer join the "frequent viewers" club? If yes, how much surplus value would Spencer receive as a club member? If no, what membership fee would Spencer be willing to pay to join the club?
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Answer the following statements true (T) or false (F)
1. Government regulations which affect entrepreneurial activities within a nation also affect total output and the standard of living. 2. A nation’s raw materials and sources of energy are considered part of its capital resources. 3. When the entire production possibilities curve shifts inward, the economy is growing. 4. A production possibilities curve shows the use of resources and the alternative combinations of goods that a society can produce.
Which of the following relationships implies that a firm's short-run cost function is linear?
A) MC = AC B) MC = AVC C) AC = AFC + AVC D) MC > AC
As developing countries make a transition to market-based economies, one of the first major capital investments is in "Western-quality" hotels. Explain why brand-name hotel accommodations are a critical step in attracting foreign investment
If a monopolistically competitive firm's marginal cost increases, then in order to maximize profits, the firm will:
A. increase output and decrease price. B. reduce both output and price. C. reduce output and increase price. D. increase both output and price.