Suppose a firm has a variable cost function VC = 20Q with avoidable fixed cost of $50,000. For regulators, the first-best regulated price is ______; the second-best regulated price is ____.
A. $80; $480
B. $480; $105
C. $80; $105
D. $105; $80
C. $80; $105
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Agave, Six Feet Under, Globe, Silk, Sotto Sotto and Zocalo are all restaurants in Atlanta. Suppose at the profit maximizing quantity, Zocalo charges $22 for each dinner entrée, and its ATC is equal to $24. What should Zocalo do?
A) Cannot determine whether Zocalo should stay open or shut down in short run, but Zocalo should go out of business in the long run. B) Produce in the short run and go out of business in the long run. C) Shut down in the short run and go out of business in the long run. D) Cannot determine whether Zocalo's should stay open or shut down in the short or long run.
Assume the market demand for wheat may be written as
Q = 45 - 2p + 0.3Y + 1pb where Y refers to income and pb refers to the price of barley. Assuming that wheat and barley both sell for $1, and income is $20, calculate the price elasticity, cross price elasticity and income elasticity for wheat.
Long-run market supply curves are upward sloping if
A) firms are identical. B) the number of firms is restricted in the long run. C) input prices fall as the industry expands. D) All of the above.
Opportunity cost is represented on the production possibilities frontier by
A) attainable and unattainable points. B) efficient and inefficient points. C) the amount of good Y forgone when more of good X is produced. D) technological progress.