Identify some of the basic assumptions of monopoly
A monopolist produces a homogeneous product and knows with certainty the demand curve he/she faces. The monopolist always aims to maximize his/her profits and does not consider possible reactions of future competitors.
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Suppose that a worker in Country A can make either 10 iPods or 5 tablets each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPods or 10 tablets each year. Country B has 200 workers. Country A would be using resources efficiently if it produced:
A. (500 iPods, 100 tablets). B. (500 iPods, 150 tablets). C. (500 iPods, 200 tablets). D. (500 iPods, 250 tablets).
Assume an economy is in equilibrium at a real GDP of $5 trillion. If aggregate expenditure (AE) increases by $1 trillion, the economy's equilibrium real GDP is likely to _____
a. increase by $1 trillion b. increase by more than $1 trillion c. increase by less than $1 trillion d. decrease by $1 trillion e. decrease by more than $1 trillion
In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.
A. market-oriented economy B. macroeconomy C. microeconomy D. command economy
Sally quit her job as an auto mechanic earning $50,000 per year to start her own business. To save money she operates her business out of a small building she owns which, until she started her own business, she had rented out for $10,000 per year. She
also invested her $20,000 savings (which earned a market interest rate of 5% per year) in her business. You are given the following information about the first year of her operations. Total revenue $120,000 Cost of labor 40,000 Cost of materials 15,000 Equipment rental 5,000 a. Calculate her economic costs for the first year. b. Calculate her accounting costs for the first year. c. Calculate her implicit costs for the first year. d. Sally tells you that she would really like to move to a location closer to town but she decided against it because "right now I don't pay any rent and it will cost me $10,000 a year to rent near town." Do you agree with her reasoning?