Author Question: The Skinned Knee Corporation can produce either 300 skateboards each week or 500 snowboards each ... (Read 34 times)

haleyc112 · **on:** Jun 29, 2018

The Skinned Knee Corporation can produce either 300 skateboards each week or 500 snowboards each week. What is their opportunity cost of producing 300 skateboards each week?

A) 300 skateboards
B) 200 snowboards
C) 500 snowboards
D) 800 snowboards

Question 2

A single-price monopoly will always charge a price that is on the elastic range of the demand for the monopoly's output. Explain why the previous statement is correct or incorrect.

What will be an ideal response?

meganmoser117 · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

C

Answer to Question 2

The statement is correct. Only when the demand is elastic is marginal revenue positive. (When demand is unit elastic, marginal revenue is zero and when demand is inelastic marginal revenue is negative.) Because marginal cost is always positive, a single-price monopoly will always produce in the elastic range of the demand because it produces where marginal cost equals marginal revenue. Hence the price that the monopoly sets will always be on the elastic range of the demand.