Graphically, how does a monopolistically competitive firm determine its profit-maximizing price?
A) It accepts the price set by the industry-wide forces of supply and demand.
B) Graphically, it finds the place where MR = MC and charges the price directly to the left of that point.
C) The firm's pricing structure is set by government regulators.
D) The firm determines its profit-maximizing output and then charges the price associated with the point on its demand curve directly above that quantity.
D
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The payoff matrix of economic profits above displays the possible outcomes for Bob and Jane who are involved in game of whether or not to advertise. After each player chooses his or her best strategy and sees the result
A) only Bob would like to change his decision. B) neither player would be willing to change his or her decision unless the other player also changes his or her decision. C) if Jane does not change her decision, Bob would like to change his. D) if Bob does not change his decision, Jane would like to change hers.
In perfect competition, if firms enter the market in the long run
A) total supply will increase causing market price to increase. B) total supply will decrease causing market price to decrease. C) total supply will decrease causing market price to increase. D) total supply will increase causing market price to decrease.
If the sellers in the cigarette industry formed a cartel and decided to set price along a straight-line downward-sloping demand curve, which point would they choose if they wanted to gain the highest total revenue?
a. The point nearest the vertical axis, where the price is highest. b. The point nearest the horizontal axis, where quantity demanded is greatest. c. One of the points higher up on the demand curve, where demand is elastic. d. One of the points lower down on the demand curve, where demand is inelastic. e. The point of unit elasticity, in the middle of the demand curve.
Which of the following expressions gives the present value of future dividends for a company whose current dividend is $5.00 and whose future dividends are expected to grow at rate g?
A) [$5.00(1 - g)]/(i - g) B) [$5.00(1 + g)]/(i + g) C) [$5.00(1 - g)]/(i + g) D) [$5.00(1 + g)]/(i - g)