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:

Confusion

A state of mind in which a person finds it difficult to understand a situation or interpret information correctly.

Glass Escalator

A metaphor describing how men, particularly in female-dominated professions, often rise faster in rank or are paid more than their female counterparts.

Glass Ceiling

An invisible barrier preventing marginalized or minority groups from rising beyond a certain level in a hierarchy, especially in the context of women in the workplace.

Role Conflict

Describes a situation where an individual experiences tension and conflict among multiple roles they are expected to perform, due to incompatible demands or expectations.