Which of the following is true about where a profit-maximizing monopoly will produce on a linear demand curve when it has positive marginal costs?
A. It will produce output where MR < 0.
B. It will produce output where MR = 0.
C. It will produce output on the elastic portion of the demand curve.
D. It will produce output on the inelastic portion of the demand curve.
Answer: C
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Suppose a chemical plant regularly dumps chemicals into a river that must be cleaned up before farmers located downstream can use the water on their crops
Dumping the chemicals into the river saves the chemical plant $750,000 in yearly disposal costs and cleaning the water costs farmers $825,000 each year. Explain what the benevolent social planner would like to see happen in this case.
The belief that higher taxes on the rich are justified because they have obtained a disproportionately large allotment of the services, infrastructure, and protections the government provides is called
A) utilitarianism. B) diminishing marginal utility. C) the benefits-received principle. D) transcendentalism.
Management and a labor union are bargaining over how much of a $50 surplus to give to the union. The $50 is divisible up to one cent. The players have one shot to reach an agreement. Management has the ability to announce what it wants first, and then the labor union can accept or reject the offer. Both players get zero if the total amounts asked for exceed $50. Which of the following is NOT a Nash equilibrium?
A. Management requests $25 and the labor union accepts $25. B. Neither management requesting $50 and the labor union accepting $0 nor management requesting $30 and the labor union accepting $10 are Nash equilibria. C. Management requests $30 and the labor union accepts $10. D. Management requests $50 and the labor union accepts $0.
A perfectly elastic supply curve is: a. upward sloping to the right
b. downward sloping to the left. c. horizontal. d. vertical.