Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Question
Chapter 1, Problem 8MC
To determine
The negative impact of bonus caps to the executives.
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Students have asked these similar questions
Consider the figure on the right. A single-price monopolist
will produce
○ A. 135 units and charge a price equal to $32.
B. 135 units and generate a deadweight loss.
OC. 189 units and charge a price equal to the
perfectly competitive price.
○ D. 189 units and charge a price equal to $45.
()
Dollars per Unit
$45
$32
MR
D
135 189
Output
MC
NG
Suppose a drug company cannot prevent resale between rich and poor countries and increases output from 3
million (serving only the rich country with a price of $80 per treatment) to 9 million (serving both the rich and the poor
countries with a price of $30 per treatment). Marginal cost is constant and equal to $10 per treatment in
both countries.
The marginal revenue per treatment of increasing output from 3 million to 9 million is equal to
○ A. $20 per treatment, which is greater than the marginal cost of $10 per treatment and thus implies that profits
will rise.
○ B. $20 per treatment, which is greater than zero and thus implies that profits will rise.
○ C. $30 per treatment, which is greater than the marginal cost of $10 per treatment and thus implies that profits
will rise.
○ D. $5 per treatment, which is less than the marginal cost of $10 per treatment and thus implies that profits will
fall.
○ E. $30 per treatment, which is less than the marginal revenue of $80 per treatment…
Consider the figure. A single-price monopolist will have a
total revenue of
Single-Price Monopolist
OA. 84×$13.
O B. 92x $13.
OC. 84×$33.
OD. 92 x $33.
C
Price ($)
$33
$13
MC
MR
D
84
92
Output
The figure is not drawn to scale.
Chapter 1 Solutions
Managerial Economics: A Problem Solving Approach
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