A Firm's Demand Curve Is Q = 2 - 0

question 54

Multiple Choice

A firm's demand curve is Q = 2 - 0.01P, where Q is measured in millions. The firm's output when marginal revenue is -$50 is ____.

• A) 2
• B) 1.5
• C) 1.25
• D) 1

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Definitions:

Lump-sum Tax

A fixed tax amount not dependent on the taxpayer's income level or financial transactions.

Economic Efficiency

A state where every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.

Incentives

Incentives are rewards or penalties that motivate individuals or entities to act in a certain way, often used to influence economic behavior and decision-making.

Ability-to-pay Principle

A tax design principle that suggests taxes should be levied according to an individual's or entity's ability to bear them.