Suppose a manager is deciding whether or not to purchase a piece of equipment to make an input internally and has completed the majority of the net present value (NPV) calculations. The manager has correctly calculated the NPV to be equal to: NPV = ($1.19 × Q) - $1,000,000, where Q is the annual quantity of the input the firm needs. In order for the NPV to be positive, the firm needs at least
________ units of the input each year.
A) 840,337
B) 890,562
C) 952,260
D) 369,566
A) 840,337
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A country produces only pencils and erasers. Pencil production is allocatively efficient if the marginal ________ of a pencil equals the marginal ________ of ________
A) cost; benefit; an eraser B) cost; cost; an eraser C) benefit; benefit; an eraser D) benefit; cost; a pencil
The difference between a firm's assets and liabilities is its
A) net worth. B) economic profit. C) implicit costs. D) accounting profit.
Which of the following statements about the elasticity of demand for a monopolist is TRUE?
A) Since a monopolist produces a good with no close substitutes, the price elasticity of demand for the good is zero. B) A monopolist produces a good with demand that is perfectly inelastic because people can not do without the good. C) Since every good has some substitute, even if imperfect, the demand for a good produced by a monopolist will not have zero price elasticity. D) Since the demand curve of a monopolist is downward sloping, the demand for the good must be inelastic.
Suppose a monopolist has positive fixed costs and constant marginal costs. If the government regulates a monopoly's price to marginal cost, in the long run:
A. the monopolist will earn a profit if ATC > MC. B. the monopolist will earn a profit if ATC > P. C. the monopolist will exit the industry. D. the monopolist will earn zero profits.