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A monopoly is producing a level of output such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $5 per unit and is incurring average variable costs of $8 per unit and average total costs of $10 per unit. Given this information, it may be concluded that the firm:
a) is operating at maximum total profit
b) is operating at a loss that could be reduced by shutting down
c) is operating at a profit that could be increased by producing more output
d) is operating at a loss that is less than the loss incurred by shutting down
It rains so much in the country of Tropicana that capital equipment rusts out (depreciates) at a much faster rate than it does in the country of Sahara. If the countries are otherwise identical, in which country will the Golden Rule level of capital ..
Why do cotton growers spend billions of dollars to dam rivers and transport water hundreds of miles to grow cotton in California deserts?
The recent immigration of labor into the United States from Mexico has led to increased calls for new restrictions on this movement of labor (including greater enforcement of existing restrictions). What would be the costs and benefits to the United ..
You operate a small but popular and profitable restaurant/bar in a college town. There are several other restaurants and bars nearby. Discuss at least two pricing strategies you can use to increase your revenues and analyze them in terms of their abi..
How does the Average Total Cost (ATC) of the mines in Canada compared to the ATC of the Alabama mines? Sketch the ATC and Marginal Cost of the whole company (include all mines in the graph, the graph has to be approximate, it should give an idea of h..
In general, how would a capital budgeting constraint on the available amount of investment funds influence these decisions? How would differing levels of project risk influence these decisions?
Imagine you are consulting with a manager of a business that sells cleaning supplies to nursing homes. Your client wants to develop a marketing plan but has a small budget for marketing his business. How would you show your client the benefits of a m..
What is market failure? If market failure is present, does this imply that government intervention will lead to a more efficient allocation of resources? Why or why not?
If extension of provisions is made to final goods but not to intermediate goods, what would this do to effective rate of protection (ERP) for country provided by its tariff schedule.
One supply side measure introduced by the Reagan administration was a cut in income tax rates. Use an aggregate demand/aggregate supply diagram to show what effect was intended. What might happen if such a tax cut also shifted the aggregate demand cu..
According to both classics and Keynes, if, all else the same, the general price level increases by 5%, The demand for money will increase by 5%. Both the demand for and the supply of money will increase by 5%. In the real world, if the Fed keeps pump..
A friend of yours just bought a new sports car. Her $35,000 car loan is financed at an interest rate of 0.75% per month for 48 months. How much is the monthly payment of her loan?
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