Suppose there is only one gas station within hundreds of miles. The owner finds that when she charges $3 a gallon, she sells 199 gallons a day, and when she charges $2.99 a gallon, she sells 200 gallons a day. The owner, obviously, is ________ and the marginal revenue of the 200th gallon of gas is __________
a. a perfect competitor (because all gas stations are perfect substitutes); $.01
b. a monopolist; $1
c. a monopolist; $2.99
d. in monopolistic competition (because gas is perceived as a differentiated product); $3
e. in monopolistic competition (because gas is perceived as a differentiated product); $600
B
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Which of the following is NOT a step involved in optimization in levels?
A) Calculating the total net benefit of each alternative B) Choosing the alternative with the highest net benefit C) Calculating the marginal consequences of moving between alternatives D) Converting all costs and benefits into a common value of measurement
If workers and firms forecast inflation accurately,
a. the aggregate supply curve will be vertical. b. the real wage will not decline as the price level rises. c. workers will not lose from inflation, and firms will not gain. d. All of the above are correct.