A monopoly producing a chip at a marginal cost of $6 per unit faces a demand elasticity of ?2.5. Which price should it charge to optimize its profits?
A. $10 per unit
B. $6 per unit
C. $8 per unit
D. $12 per unit
Answer: A
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The circular flow model shows that goods and services flow from
A) businesses to households. B) households to business. C) the factor market to businesses. D) the goods market to businesses. E) the factor markets to the goods markets.
If a business owner decided to expand her business but rather than borrowing money from a bank used her own funds, then
A) she would be unable to earn a normal profit. B) there is no cost associated with the expansion. C) she would forego the opportunity to earn interest on the money. D) the amount of her funds she used is an explicit cost. E) the amount of her funds she used is part of her normal profit.
Consider the demand curves for soft drinks shown in the figure above. Initially the economy is at point a. If people come to expect that the price of a soft drink will increase in the future, there will be a movement to a point such as
A) none of the points illustrated. B) b. C) c. D) d.
For each of the following changes, show the effect on the supply curve and state what will happen to market equilibrium price and quantity in the short run
a. The government requires pollution control filters that raise costs on goods. b. Wages of workers in this industry fall. c. There is an improvement in technology. d. The price of the good falls. e. Producers expect that the price of the good will fall in the future.