A monopolist earning economic profit in the short run determines that at its present level of output, marginal revenue is $23 and marginal cost is $30 . Which of the following should the firm do to increase profit?
a. Raise price and lower output.
b. Lower price and lower output.
c. Raise price and raise output.
d. Lower price and raise output.
e. Lower output, but leave price unchanged.
a
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Fashion Buyers I A buyer for a department store must decide on which designs the stores will carry before he knows what the demand will be in the coming season. Choosing a poorly demanded design means lots of unsold merchandise and losses that are
$200,000 on average. Passing on a highly demanded design means unsold merchandise and missing out on profits that are $300,000 on average. What probability of a design's success should he be in order to choose to carry it?
Refer to the table below. Busy Betty sells her cakes for $20 each and her constant marginal cost to produce each cake is $12, which is equal to her (constant) average total cost. What is her expected marginal benefit from holding the 21st cake in inventory?
The above table shows the probability distribution of cake sales at Busy Betty's Bakery.
A) $6.10
B) $7.20
C) $6.40
D) $8.00