Which of the following circumstances would encourage I'MaPharmaCo. to increase research and development activities?
A. cost of financial capital is high
B. patent term expires in 20 years
C. cost of financial capital is low
D. a low rate of return is likely
Answer: C. cost of financial capital is low
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If a monopoly wants to sell a larger quantity, it must
A) set a higher price. B) maintain the current price. C) set a lower price. D) implement new technology. E) increase the barrier to entry that protects it.
From the apartment landlord's perspective, what might be a substitute use of his rental property?
A) A parking lot B) An office complex C) A condominium D) Any of the above. E) Definitely none of the above.
Suppose the daily demand for Coke and Pepsi in a small city are given by QC = 90 - 100PC + 400(PP - PC) and QP = 90 - 100PP + 400(PC - PP), where QC and QP are the number of cans Coke and Pepsi sell, respectively, in thousands per day. PC and PP are the prices of a can of Coke and Pepsi, respectively, measured in dollars. The marginal cost is $0.45 per can for both Coke and Pepsi. What is the Nash equilibrium price for Pepsi?
A. $0.016 B. $0.45 C. $0.53 D. $0.38
Answer the following statements true (T) or false (F)
1. Firms in monopolistic competition sell a similar but differentiated product. 2. 3. 4. 5.