Question

$ MC $22 ATC 18 16 14 AVC D = AR 11 8 MR - Q 12 17 22 At the profit-maximizing level of production, the monopoly in Figure 11-20 will have total cost of a. $264 b. $306 c. $216 d. $187 O e. $176

Answer 1

1) Answer is A. 264

Profit maximising output is found on horizontal axis where MR=MC. Here profit maximising output is 12 units.

Total cost = Quantity * ATC = 12 * 22 = 264.

2) Answer is B.

Normative economics have words like ought to be or should be. It studies how we should take policy decisions, what we should do. Positive economics studies how the things are actually going on. How the actual decisions are taken. It deals with actual situation.

3) Answer is B.

Creative destrction means invention or innovation which replaces the old technology.

4) Answer is B. 1 food = 2 cloth.

Exchange rate is determined between the opportunity costs.

Here opportunity cost of 1 food for Austria = 6/6 = 1 cloth

Opportunity cost of 1 food for Itlay = 9/3 = 3 cloth

So exchange rate will be 1 food equal to not more than 3 cloth and not less than 1 cloth.

So exchange rate is 1 food = 2 cloth.

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