Which of the following rules is satisfied when a monopoly maximizes profits?
A. Price < MC.
B. MR = MC.
C. Price = AVC.
D. MR > MC.
Answer: B
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Since housing generally represents a large part of most household budget, the elasticity of demand for housing is likely to be large.
Answer the following statement true (T) or false (F)
The production of cigarettes is highly automated; however, a worker is required to monitor each machine. Machines and workers do not interact with one another. Given this information, there are most likely
A) economies of scale. B) economies of scope. C) constant returns to scale. D) increasing returns to scale.
If a decrease in the price of football tickets increases the total revenue of the athletic department, this is evidence that demand is:
a. price elastic. b. price inelastic. c. unit elastic with respect to price. d. perfectly inelastic.
Expected value refers to the
A. Present value of a future payment. B. Difference in the rates of return on risky and safe investments. C. Probable value of a future payment, including the risk of nonpayment. D. Future value of a current payment.