Refer to Scenario 10.1. How much profit will she make?
A) -996
B) 0
C) 1,296
D) 1,568
E) none of the above
C
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One major barrier to entry under pure monopoly arises from ________.
A. the availability of close substitutes for a product. B. the price taking ability of the monopoly. C. diseconomies of scale. D. the cost of the infrastructure needed to produce.
Answer the following statement(s) true (T) or false (F)
1. Adverse selection can cause insurance companies to limit the amount of insurance they provide to people who are "poor risks." 2. Most economists believe adverse selection played no role in the 2008 financial crisis. 3. In the moral hazard problem, people incur additional risks as a result of being insured. 4. In the principal-agent problem, the principal is the person performing work and the agent is the one for whom the work is being done. 5. If employers had to pay higher than equilibrium wages to their workers, then workers would be better off but employers would be worse off.
A firm practices input substitution when it
A. retrains Joe the welder as a painter and Pat the painter as a welder. B. buys extra machines for its workers to use. C. allows fixed cost to become variable. D. replaces unskilled labor with automated machinery.
If I is gross investment, K is capital stock, and "d" is the ratio of replacement investment to the capital stock, then Tobin's q is
A) q = I/K - d. B) I = Kq + d. C) I/K = j (q - 1 ) = d D) q = I/K (j - 1 ) - d.