Suppose a monopolist's demand curve is P = 60 - Q, and its cost function is C = 10Q + 50 so its marginal cost is 10
If a governmental agency wished to set the price so that it created the smallest deadweight loss without causing the monopolist to have negative economic profits (thus shutting down), that price would be A) $10.00.
B) $11.02.
C) $14.57.
D) $35.00.
B
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Many middle-to-older-aged men now claim they "need" Viagra (the male impotency wonder drug) for an enjoyable sex life. The economic way of thinking predicts
A) more men would be likely to claim they need Viagra if the price per pill were much lower (say two cents each) compared to the current price. B) fewer men would be likely to claim they need Viagra if the price per pill were much higher (say, two hundred dollars each) compared to the current price. C) other things constant, more prescriptions would be written if the price of Viagra falls significantly. D) other things constant, fewer prescriptions would be written if the price of Viagra rises significantly. E) all of the above are true.
If Ep is 2500 and Y is 3000, then companies will
A) reduce orders and production by 500. B) increase orders and production by 500. C) wait for final sales to increase. D) wait for final sales to decrease.