Attempts Are Being Made to Develop a Biodegradable Plastic Using

question 51

Multiple Choice

Attempts are being made to develop a biodegradable plastic using agricultural produce such as potatoes.Identify a likely impact on the equilibrium price and quantity of potatoes if such attempts are successful,all other things remaining constant.

• A)The equilibrium price will increase and the equilibrium quantity will decrease.
• B)The equilibrium price will decrease and the equilibrium quantity will increase.
• C)Both equilibrium price and quantity will decrease.
• D)Both equilibrium price and quantity will increase.
• E)There will be no change in the equilibrium price and quantity.

Understand the concept of profit maximization for monopolies.

Calculate the profit-maximizing price and quantity for a monopolist.

Analyze the impact of government intervention on monopolies, such as subsidies or taxes.

Distinguish between scenarios of zero and positive marginal costs and their implications for monopoly pricing and output.

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Definitions:

Cash Cycle

The duration between the initial investment in inventory and receiving cash from sales of the inventory.

Accounts Payable Period

The average period it takes for a company to pay off its suppliers, calculated by dividing accounts payable by the average daily purchases.

Operating Cycle

The time period that starts with the purchase of raw materials and ends with the collection of receivables generated from sales, measuring how long it takes for a business to turn expenditures into cash from sales.

Inventory Turnover

A ratio indicating how many times a company has sold and replaced inventory over a specific period, showing efficiency in managing stock.