A Firm Has Invented a New Beverage Called Slops

question 69

Multiple Choice

A firm has invented a new beverage called Slops. It doesn't taste very good, but it gives people a craving for Lawrence Welk's music and Professor Johnson's jokes. Some people are willing to pay money for this effect, so the demand for Slops is given by the equation q = 10 - p. Slops can be made at zero marginal cost from old-fashioned macroeconomics books dissolved in bathwater. But before any Slops can be produced, the firm must undertake a fixed cost of $30. Since the inventor has a patent on Slops, it can be a monopolist in this new industry.

• A) The firm will produce 5 units of Slops.
• B) The firm will produce 10 units of Slops.
• C) From the point of view of social efficiency, it is best that no Slops be produced.
• D) A Pareto improvement could be achieved by having the government pay the firm a subsidy of $35 and insisting that the firm offer Slops at zero price.
• E) None of the above.

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Definitions:

Socialist Feminists

A branch of feminism that focuses on both the public and private spheres of a woman's life, addressing issues related to economic justice and gender equality within a socialist framework.

Karl Marx

A 19th-century philosopher and economist known for his critique of capitalism and theory of historical materialism, positing class struggle as the driver of social change.

Material Conditions

The economic and environmental circumstances affecting individuals’ lives, including wealth, housing, and access to resources.

Psychoanalytic Feminism

A perspective that combines feminist analysis with psychoanalytic theories to explore the psycho-social foundations of gender inequalities.