The firm's profit-maximizing price is
a. P1.
b. P2.
c. P3.
d. P4.
Answer: c. P3.
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Suppose the target exchange rate set by the Fed is 100 guilders per dollar. If the demand for dollars temporarily decreases, to maintain the target exchange rate, the Fed can
A) sell dollars. B) buy dollars. C) increase U.S. exports. D) increase U.S. imports.
Which of the following would be a consequence of substitution bias in the CPI?
A) Judges would award child support payments that would not adequately keep up with the true cost of inflation. B) Businesses would overcompensate employees for inflation when giving cost of living raises. C) Social Security payments would not adequately compensate retired workers for inflation. D) The inflation rate based on the CPI would underestimate the true level of inflation.
The government would use production taxes to remedy the problem of substantial:
a. internal benefits of production. b. external benefits of production. c. external costs of production. d. external benefits of consumption e. external costs of consumption.
The country with the lowest child poverty rate of those listed here is
A. Sweden. B. Denmark. C. Britain. D. Australia.