A Firm Has Invented a New Beverage Called Slops

question 34

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:

Precapillary Sphincter

A band of smooth muscle that adjusts blood flow into capillaries mainly by contracting and relaxing, thereby regulating the passage of blood into tissues.

Lactate Production

Lactate production occurs during anaerobic respiration in muscles, where glucose is converted to lactate in the absence of sufficient oxygen, leading to muscle fatigue.

Venous Tone

The degree of constriction experienced by the veins, influencing the volume of blood held within venous reservoirs and blood pressure.

Medulla Oblongata

The lower portion of the brainstem that regulates vital functions, such as heart rate and breathing.