A monopolist has total cost TC = .1Q2 - 2Q + 100 and marginal cost MC = .2Q - 2 . Market demand is Q = 86 - P, implying that the firm's marginal revenue is MR = 86 - 2Q. Its profit-maximizing output is
a. 92
b. 46
c. 40
d. 20
c
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The tables above show the marginal costs and benefits from production of paper. If the market is perfectly competitive and unregulated, the efficient amount of paper will be produced by setting a Pigovian tax of
A) $5 per ton. B) $10 per ton. C) $20 per ton. D) $40 per ton.
When the price of a good is below its equilibrium level under perfect competition,
A. consumers would benefit from an expansion of output. B. some consumers are earning larger consumer’s surpluses than they would in equilibrium. C. the market is not operating at maximum efficiency. D. All of the responses are correct.
Which of the following will result in an upward rotation of the consumption function?
a. A decrease in the proportional tax rate on income b. An increase in consumer income c. An increase in the flat tax rate d. A decrease in the flat tax rate
What is the drawback for a country that chooses to fix its exchange rate?
a. Fixing the exchange rate can deteriorate the international competitiveness because the real exchange rate can't fluctuate anymore. b. Businesses in the country are more exposed to business risks associated with exchange rate changes. c. The central bank loses its ability to influence the money supply, unless severe capital controls are imposed. d. Fixing the exchange rate has no disadvantages and should be adopted by all countries.