Suppose a monopolist's demand curve is P = 60 - Q, and its cost function is C = 10Q + 50 so its marginal cost is 10. If a governmental agency wished to set the price that maximized social welfare, that price would be
A) $10.00.
B) $11.02.
C) $14.57.
D) $35.00.
A
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One of the major reasons for the U-shaped average total cost curve is the fact that
A) there are increasing returns from labor regardless of the number of workers employed. B) there eventually are decreasing returns from labor as more workers are employed. C) prices fall as output increases. D) the average fixed cost increases as more output is produced. E) the variable cost decreases as more output is produced.
In the Keynesian model, suppose the Fed sets a target for the real interest rate. If the IS curve shifts to the left, and the Fed wants to keep output unchanged
A) taxes will increase. B) the money supply will decline. C) the real interest rate will decrease. D) taxes will decrease.
Compared to proportional-representation systems, two-party systems are thought to:
A. lead to more diverse views in the policy process. B. offer a wider variety of platforms among which voters can choose. C. create unwieldy combinations of policies within one platform. D. be much less efficient and lead to very few compromises when voting.
Real consumption is a function of real disposable income, but the simple Keynesian model uses real GDP instead of real disposable income. This is appropriate since
A. real disposable income is a fixed percentage of real GDP. B. real GDP is a fixed percentage of real disposable income. C. we cannot measure either exactly and the purpose of the exercise is theoretical only. D. real disposable income tends to move proportionately with real GDP.