When a monopolist sells two units of output its total revenue is $600. When a monopolist sells three units of output its total revenue is $690. In order to sell three units of output instead of only two, the monopolist must
A. make no change in price and increase output by one unit.
B. decrease its price by $70 per unit.
C. decrease its price by $30 per unit.
D. decrease its price by $90 per unit.
Answer: B
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A large part of the principal-agent problem stems from the desire of
A) agents to work hard. B) agents to avoid working. C) principals to work hard. D) principals to avoid working.
How will an increase in federal government spending without an increase in taxes affect real GDP and the price level in the short run in a closed economy and in an open economy?
What will be an ideal response?
Stan owns a software design business. He obtained a bank loan to buy computer equipment for his business. He pays $1,000 per month for interest on the loan. He has 10 employees, each of whom is paid $4,000 per month. Because his business has been
successful, next month he will increase employee wages to $5,000. If the revenue from his business remains at its current level, Stan is considering an addition to his office. Which of the following statements regarding Stan's business is false? A) The payments Stan makes to his employees are variable costs and explicit costs. B) The monthly payment Stan makes for his bank loan is an implicit cost. C) The monthly payment Stan makes for his bank loan is a fixed cost. D) The addition Stan is considering to make to his office would be an implicit cost.