____ 24. A profit-maximizing monopoly will spend on a process innovation a. up t
ID: 1213872 • Letter: #
Question
____ 24. A profit-maximizing monopoly will spend on a process innovation
a.
up to the point where P = MC.
b.
up to the point where P = AC.
c.
anywhere where MR>MC.
d.
up to the point where MR = MC.
e.
anywhere where MR<MC.
____ 25. A successful process innovation can be expected to lead to
a.
an upward shift of the MC and AC curves which will lower output and raise the price of the product.
b.
an upward shift of the MC and AC curves which will raise output and lower the price of the product.
c.
a downward shift of the MC and AC curves which will lower output and raise the price of the product.
d.
a downward shift of the MC and AC curves which will raise output and lower the price of the product.
e.
a downward shift of the MC and AC curves which will leave unchanged the output and price of the product.
____ 26. A firm producing a smoke externality is producing
a.
more than the socially optimal quantity of output.
b.
less than the socially optimal quantity of output.
c.
exactly the socially optimal quantity of output.
d.
There is insufficient information to answer.
____ 27. Rising prices help control the process of resource depletion by
a.
discouraging consumption and waste.
b.
stimulating more efficient use of the depletable resource.
c.
encouraging resource-saving innovation.
d.
doing all of the above.
____ 28. Rising prices for a natural resource stimulate
a.
the development of complements for the resource.
b.
the development of substitutes for the resource.
c.
the development of externalities from the resource.
d.
All of the above are correct.
____ 29. Taxes on sales of liquor, tobacco, gasoline and non-essentials are examples of
a.
direct taxes.
b.
excise taxes.
c.
progressive taxation.
d.
loopholes.
____ 30. The incidence of a tax refers to
a.
who actually collects the tax.
b.
how frequently the tax is collected.
c.
who bears the economic burden of the tax.
d.
how the tax affects prices or wages.
a.
up to the point where P = MC.
b.
up to the point where P = AC.
c.
anywhere where MR>MC.
d.
up to the point where MR = MC.
e.
anywhere where MR<MC.
Explanation / Answer
24.
up to the point where MR = MC.
as beyond this there will be losses so the max is marginal revenue equals to marginal costs
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