Menu costs ________
A) are the cost a firm bears when it changes its prices
B) are one source of price stickiness because changing prices involves many hidden costs
C) are one source of price stickiness because firms may not want to change their "menus" too often and risk alienating customers
D) all of the above
E) none of the above
D
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The figure above shows the market for coffee. If one firm owns all the coffee outlets and sells 10 million pounds of coffee a month, the deadweight loss is
A) zero. B) $7.5 million. C) $15 million. D) $10 million
A firm will increase its spending on advertising until
A) it has monopolized the market. B) it has deterred all future entry. C) the marginal benefit of advertising is zero. D) the marginal benefit of advertising equals the marginal cost of advertising.