A Firm Has Invented a New Beverage Called Slops

question 20

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 = 10 - 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 $30.Since the inventor has a patent on Slops, it can be a monopolist in this new industry.

• A)The firm will produce 5 units of Slops.
• B)A Pareto improvement could be achieved by having the government pay the firm a subsidy of $35 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 10 units of Slops.
• E)None of the above.

---

Definitions:

Matched Paired

A study design in which subjects are paired based on certain criteria, with each pair receiving different treatments for comparison of the effects.

Direction Of Difference

Refers to the predicted or observed direction of relationships or differences between variables in statistical analysis, indicating whether the effect is positive or negative.

Sign Test

A statistical procedure used for assessing whether paired observations have different median values, without assuming any specific data distribution.

Population Probability Distributions

Mathematical functions that provide the probabilities of occurrence of different possible outcomes for an entire population.