A local video store estimates its average customer's demand per year is Q = 7 ? 2P, and it knows the marginal cost of each rental is $0.5. How much should the store charge for each rental if it engages in optimal two-part pricing?
A. $0.35
B. $0.7
C. $1.00
D. $0.5
Answer: D
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Which of the following is a valid shortcoming of the use of foreign aid to eradicate poverty?
A) It may not lead to a sizeable increase in physical capital in poorer countries. B) It is difficult to transfer aid to poor countries. C) It can lead to polarization of the world economy. D) It mostly leads to the transfer of resources among rich countries.
Comment on the following statement: "If one player in the game does not have a dominant strategy, it is impossible to predict the outcome of the game."
What will be an ideal response?
Assume the graph shown represents the market for button-up shirts and was originally in equilibrium with D and S. What type of shock might cause a shift from D to D2?
A. The price of buttons has increased.
B. The price of ties went up.
C. The price of sweatshirts went up.
D. Income has increased.
Compare the advantages and disadvantages of marginal and average cost pricing for natural monopolies