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ANS: B DIF: 2 46. A firm has invented a new beverage called Slops. It doesn't taste very good, but it gives people a craving for Lawrence Welk's music and Professor Johnson's jokes. Some people are willing to pay money for this effect, so the demand for Slops is given by the equation q 14-p. Slops can be made at zero marginal cost from old-fashioned macroeconomics books dissolved in bathwater. But before any Slops can be produced, the firm must undertake a fixed cost of $54. Since the inventor has a patent on Slops, it can be a monopolist in this new industry. a. The firm will produce 7 units of Slops. b. A Pareto improvement could be achieved by having the government pay the firm a subsidy of $59 and insisting that the firm offer Slops at zero price. C. d. e. From the point of view of social efficiency, it is best that no Slops be produced. The firm will produce 14 units of Slops. None of the above. ANS: B DIF: 3

ANS: B DIF: 2 46. A firm has invented a new beverage called Slops. It doesn't taste very good, but it gives people a craving for Lawrence Welk's music and Professor Johnson's jokes. Some people are willing to pay money for this effect, so the demand for Slops is given by the equation q 14-p. Slops can be made at zero marginal cost from old-fashioned macroeconomics books dissolved in bathwater. But before any Slops can be produced, the firm must undertake a fixed cost of $54. Since the inventor has a patent on Slops, it can be a monopolist in this new industry. a. The firm will produce 7 units of Slops. b. A Pareto improvement could be achieved by having the government pay the firm a subsidy of $59 and insisting that the firm offer Slops at zero price. C. d. e. From the point of view of social efficiency, it is best that no Slops be produced. The firm will produce 14 units of Slops. None of the above. ANS: B DIF: 3

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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ANS: B DIF: 2 46. A firm has invented a new beverage called Slops. It doesn't taste very good, but it gives people a craving for Lawrence Welk's music and Professor Johnson's jokes. Some people are willing to pay money for this effect, so the demand for Slops is given by the equation q 14-p. Slops can be made at zero marginal cost from old-fashioned macroeconomics books dissolved in bathwater. But before any Slops can be produced, the firm must undertake a fixed cost of $54. Since the inventor has a patent on Slops, it can be a monopolist in this new industry. a. The firm will produce 7 units of Slops. b. A Pareto improvement could be achieved by having the government pay the firm a subsidy of $59 and insisting that the firm offer Slops at zero price. C. d. e. From the point of view of social efficiency, it is best that no Slops be produced. The firm will produce 14 units of Slops. None of the above. ANS: B DIF: 3
Transcribed Image Text:ANS: B DIF: 2 46. A firm has invented a new beverage called Slops. It doesn't taste very good, but it gives people a craving for Lawrence Welk's music and Professor Johnson's jokes. Some people are willing to pay money for this effect, so the demand for Slops is given by the equation q 14-p. Slops can be made at zero marginal cost from old-fashioned macroeconomics books dissolved in bathwater. But before any Slops can be produced, the firm must undertake a fixed cost of $54. Since the inventor has a patent on Slops, it can be a monopolist in this new industry. a. The firm will produce 7 units of Slops. b. A Pareto improvement could be achieved by having the government pay the firm a subsidy of $59 and insisting that the firm offer Slops at zero price. C. d. e. From the point of view of social efficiency, it is best that no Slops be produced. The firm will produce 14 units of Slops. None of the above. ANS: B DIF: 3
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