Wobble's Weebles Is the Only Producer of Weebles

question 18

Multiple Choice

Wobble's Weebles is the only producer of weebles. It makes weebles at constant marginal cost c(where c > 0) and sells them at a price of p₁ per weeble in market 1 and at a price of p₂ per weeble in market 2. The demand curve for weebles in market 1 has a constant price elasticity of demand equal to -2. The demand curve for weebles in market 2 has a constant price elasticity equal to - . The ratio of the profit-maximizing price in market 1 to the profit-maximizing price in market 2 is

• A) 2/3
• B) 1/3
• C) 3/2
• D) 3
• E) dependent on the value of

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Definitions:

Property Rights

Legal rights and claims governing the use, transfer, and disposal of property, which can apply to both tangible and intangible assets.

Market Failure

A situation where the free market fails to allocate resources efficiently, leading to a net social welfare loss.

Private Goods

Goods that are excludable and rival in consumption, meaning their use is limited to paying customers and one person's use of the good prevents another's use of it.

Prices

The sum of money needed to buy a product or service.