The policy of attempting to obtain a specific low level of inflation over the long run is referred to as:
A) price control.
B) inflation targeting.
C) the seigniorage policy.
D) the minimal inflation policy.
Answer: B) inflation targeting.
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If an average cost pricing rule is imposed on the firm in the figure above, the price will be
A) $5 per unit. B) $25 per unit. C) $15 per unit. D) $20 per unit.
Kate and Alice are small-town ready-mix concrete duopolists. The market demand function is Qd = 20,000 - 200P where P is the price of a cubic yard of concrete and Qd is the number of cubic yards demanded per year. Marginal cost is $80 per cubic yard. Suppose Kate enters the market first and chooses her output before Alice. What is Alice's profit?
A. $10,000 B. $5,000 C. $20,000 D. $15,000
If producers incorrectly set the price of their product too high:
A. a shortage will result. B. a surplus will result. C. equilibrium will result. D. the industry will die out soon.
Which of the following is true for a monopolist that does not price discriminate?
a. P > MR because some revenue is lost from having to lower the price on all units sold b. P < MR because the monopolist must lower price to sell more output c. P = MR only at the profit-maximizing level of output d. P = MR because there are no close substitutes for the good e. P = MR because the firm faces a perfectly elastic demand curve