A monopolist has a marginal cost of 4 and no fixed cost. It faces the following inverse demand curve: p = 40 - q. The monopolist can introduce a new packaging for its product. Such new packaging does not alter the marginal cost. It makes the product more attractive for the consumer, and it would lead to a new inverse demand curve p = 40 - 0.5q. What is the maximum amount that the monopolist would be willing to invest in this new packaging project?
A) 245
B) 324
C) 420
D) It cannot be determined.
Question 2
One firm previously operated as a monopoly. Now, one potential entrant exists. Consumers would prefer
A) entry, and the firms to split the output equally.
B) no entry, and for the incumbent to produce the Stackelberg leader level of output.
C) entry, and for the incumbent to produce the Stackelberg leader level of output.
D) no entry, and the monopoly to continue.
A fixed action pattern as an example of innate behaviour.
A fixed action pattern elicited by a sign stimulus.
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