Suppose a multi-product monopolist sells two complementary goods, A and B. Annual market demand for good A is QdA = 600 - 25PA - 12PB. Each time a consumer buys A, his demand for B is QdB = 4 - 0.4PB. The marginal cost of good A is a constant $4, and the marginal cost of good B is a constant $0.50. Suppose the price of good B is $5. What is the effective marginal cost of selling a unit of good A?
A. $5
B. $4
C. -$5
D. -$9
C. -$5
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A falling average cost implies that
a. marginal cost is above average cost b. marginal cost is below average cost c. marginal cost is equal to average cost d. none of the above
Which of the following is not a gain from division of labor?
a. Workers' abilities are matched to tasks. b. Workers gain experience from the repetition of the tasks. c. Workers save time by not moving to different tasks. d. Workers' morale increases as tasks become more specialized. e. The introduction of labor-saving machinery is possible.
If a 10 percent decrease in the price of one good generates a 3 percent increase in the quantity demanded for another good, then the
a. two goods are complementary b. cross elasticity between the two goods is positive c. two goods are substitutes d. price elasticity of demand for the good whose quantity demanded increased must be inelastic e. price elasticity of demand for the good whose quantity demanded increased must be elastic
Suppose we expect consumer prices to increase by about 30 percent between 2010 and 2020, and the minimum wage was $7.25 per hour in 2010. What should be the minimum wage in 2020 if it is set to maintain the same purchasing power as in 2010?
A) $7.25 B) $7.55 C) $9.42 D) none of the above.