The standard monopoly model eliminates the monitoring problem by assuming that:
A. the owner does not maximize profit.
B. the owner of the firm has no control over decisions.
C. the owner of the firm makes all the decisions.
D. marginal cost is zero, and so the output at which profit is maximized is the same as the output at which sales revenues are maximized.
Answer: C
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Suppose Al, Betty, and Carl own the only fishing companies in your village. Suppose the market price today is $10 per fish. Suppose Al catches 4,000 fish with an average total cost of $7.50, Betty catches 6,000 fish with an average total cost of $6, and Carl catches 10,000 fish with an average total cost of $5 . If everyone is a profit maximizer, what is Betty's marginal cost?
a. $6 b. $7 c. $8 d. $9 e. $10
Rational self-interest means
A) always increasing your wealth. B) pursuing what makes you better off. C) pursuing activities that maximize income. D) always pursuing activities that are consistent with your faith.