Using the table above answer the following question. Assume that the marginal cost of production for this firm is $0
If this firm is a monopolist and can only charge a unique price in whole dollar amounts which price will he charge to maximize profits? How much revenue would the firm collect? How would this answer change if this firm were to practice perfect price discrimination?
Since marginal costs are zero the firm will want to maximize total revenue. This is achieved at a price of $3 . The firm would collect $9 . If the firm is able to engage in perfect price discrimination it will collect $15 ($5 + $4 + $3 + $2 + $1).
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If desired spending exceeds output, then firms:
A) accumulate their inventories and cut production. B) deplete their inventories and cut production. C) deplete their inventories and increase production. D) accumulate their inventories and increase production.
When the price of a good rises, marginal utility per dollar spent on that good ________, leading consumers to purchase ________ of that good.
A. rises; more B. falls; more C. falls; less D. rises; less
How can the demand for one good be affected by increased demand for another one?
(A) When goods are bought together, increased demand for one will decrease demand for the other. (B) A drop in price for a good will increase demand for the good and its substitute. (C) If goods are used together, increased demand for one will increase demand for the other. (D) If goods are substitutes for each other, increased demand for one will increase demand for the other.
One of the reasons that Real Gross Domestic Product is not synonymous with social welfare is
A. environmental quality is ignored. B. quality has remained steady. C. things produced by people under 18 are not counted. D. people substitute between goods.