Which of the following would NOT affect a good's price elasticity of demand?
A. the proportion of one's budget spent on an item
B. the ease of substitution between goods
C. the cost of producing the good
D. the number of substitute goods available
Answer: C
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Suppose a monopoly is producing its profit-maximizing output level. Now suppose the government imposes a lump-sum tax on the monopoly, independent of its output
As a result the monopolist will increase the price of its product to cover its higher cost. Indicate whether the statement is true or false
Given the information in Scenario 4.3, erasers are:
A) a normal good. B) an inferior good. C) neither normal nor inferior. D) complements. E) necessities.
A firm sells 1000 units per week. It charges $15 per unit, the average variable costs are $10, and the average costs are $25 . At what price does the firm consider shutting-down in the long run?
a. $25 b. $0 c. $15 d. $10
Marginal cost is calculated as:
A. the change in output divided by the change in total costs. B. the percentage change in total costs divided by the percentage change in output. C. the change in total cost divided by the change in output. D. total revenue minus total costs.