Every firm that has the ability to affect the price of the good or service it sells will
A) earn a short-run profit but break even in the long run.
B) shut down in the short run.
C) have a marginal revenue curve that lies below its demand curve.
D) have a perfectly elastic demand curve.
Question 2
Refer to Table 10-3. The table above shows Lee's marginal utility per dollar from consuming ice cream cones and cans of Lime Fizz Soda. The price of an ice cream cone is 2 and the price of Lime Fizz Soda is 1.
Use this information to select the correct statement.
A) If Lee has an unlimited budget he will maximize his utility by buying only Lime Fizz Soda.
B) We cannot determine how many ice cream cones and cans of Lime Fizz Soda Lee will consume without knowing what his income is.
C) To maximize his utility Lee should consume 1 ice cream cone and 5 cans of Lime Fizz Soda.
D) We cannot determine how many ice cream cones and cans of Lime Fizz Soda will maximize Lee's utility because we are given only the marginal utility per dollar values. We also need to know the marginal utility for each quantity.
Josiah Wedgwood, Queen's Ware dinner service (detail).
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Cost = $99.49; Rate of markup based on cost = 32%. Find the markup and selling price.