roussel

# roussel - 1 Suppose that a profit-maximizing firm sells...

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1. Suppose that a profit-maximizing firm sells t-shirts in a monopolistically competitive market and is producing its profit-maximizing level of output Suppose further that at this level of output its marginal cost is \$9 and its average total cost is \$9. Over time, everything else held constant, the number of firms selling t-shirts in the market will (\j\(,c C\^ decrease. remain unchanged. increase. ... ^ ,., ,/. Suppose the government imposes an excise tax of \$10 on a market. Suppose further that the price elasticity of demand for the good is 1.5 and the price elasticity of supply is 3.5. Everything else held constant, the price the sellers receive for the good will ^ by ^ .!_ CJO B) C) D) E) decrease; 3 increase; 3 increase; 7 increase; 15 decrease; 7 K c? - 3. Suppose a new organizational scheme increases the productivity of every worker at a tapas S I bar. Everything else held constant, this new scheme will cause in the total fjxed_cost of the bar. no change an increase a decrease 4. Suppose a new union contract increases the hourly wage for all workers at a steel mill. SH/ Everything else held constant, this new contract will cause the marginaj cost of the mill to decrease, increase. C) remain unchanged. ^5. Suppose, at a moment in time, the price at which a_mQnopelisi4s selling its output is \$lg P"^ I ' and the marginal revenue from the last unit sold is \$10. Suppose further that the marginal fV\ ^ (0 cost of producing the last unit of output sold is \$11. Everything else held constant, which of fy\ the following actions should the non-price discriminating, profit-maximizing monopolist take? ,A) Increase output and increase price. /IAC Decrease output and increase price. Shutdown. \T_ Decrease output and decrease price. Increase output and decrease price. C) D) E) 6. Suppose a grocery store advertises the following special: "This Week ONLY: 10% Off & a Free Bag when you purchase 6 Bottles or more of any 750 ml Wine." VyitMhis_offer, the store is A) not engaging in price discrimination.

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