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Author Question: The demand curve and marginal revenue curve for red rubber balls are given as follows: Q = 16 - P ... (Read 14 times)

james9437

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on: Jul 1, 2018
The demand curve and marginal revenue curve for red rubber balls are given as follows:
 
  Q = 16 - P MR = 16 - 2Q
  What level of output maximizes profit?
  A) 0
  B) 4
  C) 5.5
  D) 6
  E) B, C and D all maximize profit.

Question 2

Ronny's Pizza House operates in the perfectly competitive local pizza market. If the price of pizza cheese increases (ceteris paribus), what is the expected impact on Ronny's profit-maximizing output decision?
 
  A) Output increases to cover the higher input cost
  B) Output increases because the marginal cost curve shifts upward
  C) Output decreases because the marginal cost curve shifts upward
  D) Output decreases because the price of pizza must also increase


scrocafella

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Reply #1 on: Jul 1, 2018
Answer to Question 1

D

Answer to Question 2

C


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