A Firm Has Invented a New Beverage Called Slops

question 12

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 = 18 - 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 $86. Since the inventor has a patent on Slops, it can be a monopolist in this new industry.

• A) The firm will produce 9 units of Slops.
• B) A Pareto improvement could be achieved by having the government pay the firm a subsidy of $91 and insisting that the firm offer Slops at zero price.
• C) From the point of view of social efficiency, it is best that no Slops be produced.
• D) The firm will produce 18 units of Slops.
• E) None of the above.

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Definitions:

Dyadic Level

relates to an analysis or interaction between two units or entities, focusing on the reciprocal nature of their relationship or communication.

Group Level

Refers to the stage or phase that a group is at based on its development, productivity, or functionality within an organization.

Organizational Level

Pertains to the hierarchical layer or tier within an organization, affecting structure and decision-making.

State Of Ferment

A period of unrest or disorder, often characterized by change and uncertainty.