A risk-neutral monopoly must set output before it knows the market price. There is a 50 percent chance the firm's demand curve will be P = 40 ? Q and a 50 percent chance it will be P = 60 ? Q. The marginal cost of the firm is MC = 3Q. The expected profit-maximizing quantity is:
A. 5.
B. 10.
C. 50.
D. 25.
Answer: B
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If an individual's budget constraint shifts, the individual's changes in consumption can be broken down into _____ and _____ effects
a. budget; consumption b. income; substitution c. utility; indifference d. wealth; savings
Which of the following statements about economic efficiency is not true?
a. Economic efficiency is equivalent to Pareto optimality. b. Economic efficiency can be determined normatively. c. Economic efficiency is superior to equity. d. Economic efficiency can be evaluated positively.
What is the difference between comparative advantage and absolute advantage?
What will be an ideal response?
If you buy an insurance policy with a low deductible and no co-payments, you would end up paying
a. A higher premium b. A lower premium c. The premium of a low risk individual d. Both B&C