A Firm Has Invented a New Beverage Called Slops

question 33

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 = 16 - 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 $69.Since the inventor has a patent on Slops, it can be a monopolist in this new industry.

• A)The firm will produce 16 units of Slops.
• B)A Pareto improvement could be achieved by having the government pay the firm a subsidy of $74 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 8 units of Slops.
• E)None of the above.

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Definitions:

Situational Leadership Model

A leadership theory proposing that effective leadership varies according to, and must adapt to, the needs of the situation and the readiness of the team being led.

Delegating

The act of assigning responsibility and authority to another person to carry out specific activities, while the delegator retains overall responsibility for the outcome.

Hersey-Blanchard Situational Leadership Model

A theory that suggests the most effective leadership style varies according to the task at hand and the maturity level of the team or individual being led.

Vroom-Jago Leader-Participation Model

A decision-making framework for leaders that helps determine the level of involvement of team members in the decision-making process.