The Cost of Producing Each Bottle of a Certain Brand

question 48

Multiple Choice

The cost of producing each bottle of a certain brand of shampoo is $0.25.If the market for shampoo is monopolistically competitive and the demand for shampoo is inelastic,a manufacturer who charges $0.35 for each bottle will ________.

• A) shut down production in the short run
• B) exit the industry in the long run
• C) earn an economic profit of $0.10 per bottle
• D) earn a total revenue of $0.10 per bottle

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Definitions:

Mean

The average of a set of numbers, calculated by dividing the sum of all the numbers by the count of numbers.

Poisson Probability Tables

Tables that provide the probabilities of different numbers of events happening in a fixed interval of time or space, assuming these events occur with a known constant rate and independently of the time since the last event.

Occurrences

Incidents or instances of something happening.

Poisson Random Variable

A type of discrete random variable that expresses the probability of a given number of events occurring in a fixed interval of time or space if these events happen with a known constant mean rate and independently of the time since the last event.