A Profit-Maximizing Monopolist Has the Cost Schedule C(y) = 40y

question 14

Multiple Choice

A profit-maximizing monopolist has the cost schedule c(y) = 40y. The demand for her product is given by , where p is her price. Suppose that the government tries to get her to increase her output by giving her a subsidy of $21 for every unit that she sells. Giving her the subsidy would make her

• A) decrease her price by $49.
• B) decrease her price by $28.
• C) decrease her price by $10.50.
• D) decrease her price by $21.
• E) leave her price unchanged.

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Definitions:

Saving Rate

The proportion of income that is not spent, but instead saved by individuals, households or the nation as a whole.

Productivity

measures the efficiency of production in terms of the amount of output generated per unit of input, such as labor or capital.

Human Capital

The collective skills, knowledge, or other intangible assets of individuals that can be used to create economic value for the individuals, their employers, or their community.

Capital Stock Per Worker

A measure of the amount of capital available per employee in a company or economy, indicating the level of investment in tools, buildings, and equipment each worker has to work with.