A monopolist faces a demand curve given by P = 60 -2Q and has total costs given by TC = Q2. Its marginal revenue is MR = 60 - 4Q and its marginal cost is MC = 2Q. Now suppose that the country in which this monopolist is located decides to engage in international trade. The world price of the product produced by the monopolist is $10. What is the firm's profit-maximizing output level?
a. 5
b. 20
c. 30
d. 40
Ans: a. 5
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Gary consumes 10,000 units of electricity when his income is $500. When his income increases to $1,000, his consumption of electricity increases to 18,000 units. What is Gary's income elasticity of demand for electricity?
A) 0.5 B) 0.8 C) 1.8 D) 2
Price elasticity of demand is typically negative because
a. as price decreases, quantity demanded decreases b. as price decreases, quantity demanded increases c. as price decreases, demand decreases d. as price decreases, demand increases e. consumers rarely respond to a change in price
Supply-side economists favor tax incentives that
A. Discourage infrastructure development. B. Encourage investment. C. Discourage saving and encourage spending. D. Increase the level of government regulation.
If product prices decrease more than nominal wages decrease, then the real value of wages will increase.
Answer the following statement true (T) or false (F)