A risk-neutral monopoly must set output before it knows the market price. There is a 50 percent chance the firm's demand curve will be P = 40 ? Q and a 50 percent chance it will be P = 60 ? Q. The marginal cost of the firm is MC = 3Q. The expected profit-maximizing price is:
A. $30.
B. $40.
C. $10.
D. $20.
Answer: B
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The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% chance that it could all be stolen. To reduce the chance of theft to zero, Bob is willing to pay
A) $20. B) $50. C) $70. D) $80.
A perfectly competitive firm spends a significant part of its revenue on advertisements, and tries to sell more by reducing its price below the market price
a. True b. False Indicate whether the statement is true or false
If the price level is 100 in one year and rises to 102 the next year, then the inflation rate is
A) 0.02 percent. B) 100 percent. C) 102 percent. D) 2.0 percent. E) unable to be determined without knowing potential GDP.
In the above figure, no relationship between x and y is shown in Figure
A) A. B) B. C) C. D) D. E) A and Figure B.