In a perfectly competitive market, the firm would price the good equal to marginal cost (P=MC). Since the marginal cost at the profit maximizing point is 7, price would equal 7.

In this example, we again note that this question operates in the short run. Despite losing money, firms cannot leave the market in the short run due to fixed cost obligations (rent, contracts, etc.) Not producing any goods is not the same as leaving the market (which the firm would do in the long run). Not producing any good would result in a net profit of -15 whereas producing 3 units of goods at a price of 7 would result in a net profit of -3. Therefore, production would be the best option for this firm.

The schedule shows that the marginal revenue is positive, but decreasing. As long as marginal revenue is greater than zero (MR>0) the total revenue will increase. When marginal revenue becomes zero (MR=0), total revenue will remain constant. When margina, revenue becomes less than zero (MR<0), total revenue will decrease. Diminishing returns, as well as the total revenue schedule, shows a continuous decrease of MR. We would expect, then, that TR would increase, become flat, then decrease.

The monopolist would produce at the point where MR = MC. However, price is now derived from the consumer demand curve rather than being equal to MC. This is because a monopolist’s marginal revenue curve is steeper than the consumer demand curve. The resulting intersection causes monopolists to product a lower quantity of goods at a higher price. This price would exceed the marginal cost of production, allowing the monopolist to generate economic profit.

If the government imposes a price floor above the equilibrium price, the quantity of goods supplied would exceed the quantity of goods demanded (Qs > Qd) leading to a surplus. Consumer surplus would decrease and producer surplus would increase. We would also generate a dead weight loss (DWL) whereas before there was none, so DWL increases.

f the price of Plobs increases and the price of Clobs increase, they must be complements. If the price of Plobs increases and the price of Globs decreases, they must be substitutes. We are not told anything about relative changes in quantity given a change in price, so we cannot determine elasticity. Clobs and Globs are not given a definitive relationship.

The rise in the cost of fertilizer represents a change in input prices, which is a determinant of supply, not demand. All other options represent determinants for demand.

If demand for widgets increases when incomes decrease, then the income elasticity for widgets is negative. This is because income elasticity is E = percent change in quantity/percent change in income. If E < 0 then the good is inferior.

Complementary goods typically replace one another in consumption. Thus, a decrease in demand for one good will typically increase the demand of the other good.

The question states that the price of one of the goods increased, which would lead to a decrease in its demand. If the demand of the other good increases as a result, than the two goods are likely to be substitute goods.

A private good is rival, which means that a person's consumption affects another person's consumption of the good, and excludable, which means that a person can prevent another person from consuming the good. Among the choices here, the only one that meets both criteria is the candy bar, which is both rival and excludable.

In terms of individual income and wealth, sales tax imposes a greater burden on the poor than the rich. One's consumption of taxable items typically does not increase as fast as one's income. Thus, lower-income individuals spend a larger portion of their income and wealth than higher-income individuals.