Suppose That Samsung's Production Costs Are the Same in Both

question 33

Multiple Choice

Suppose that Samsung's production costs are the same in both China and India.Also suppose that Samsung can produce cellphones in China for an average cost of $10 per phone for 300 million phones, $12 per phone for 200 million phones, and $15 per phone for 100 million phones.If customers in India demand 100 million phones and customers in China demand 200 million phones, and there are transportation costs of $6 per phone, Samsung's lowest cost option is to

• A) produce phones only in India and export phones to China.
• B) produce phones only in China and export phones to India.
• C) produce 100 million phones in India for Indian demand and produce 200 million phones in China for Chinese demand.
• D) produce 150 million phones in India for Indian demand and 50 million to export to China and produce 150 million phones in China for Chinese demand.

Understand the basic characteristics and structures of monopolies.

Identify factors that distinguish monopolies from perfectly competitive markets.

Describe how monopolies determine their profit-maximizing level of output and price.

Explain the role of public utilities and natural monopolies in the economy.

---

Definitions:

Initial Endowment

The initial allocation of income, wealth, or resources that an individual or firm possesses before entering into any economic transactions.

Taxes Rise

Taxes rise refers to the increase in the required contributions by individuals or corporations to government revenues.

Laspeyres Price Index

a measure of the change in the cost of purchasing a fixed basket of goods and services, relative to the cost of the same basket in a base period.

Demand Function

A mathematical expression showing the relationship between the quantity demanded of a good and its price, along with other determinants like income and prices of related goods.