5. If the point price elasticity of demand equals -2 and the marginal cost per unit is $10, the optimal price is: a. $5 b. $10 c. $20 (1. impossible to determine without further information. When the cross-price elasticity 8 PX = '3 : demand rises by 3% with a 1% increase in the price of X. the quantity demanded decreases by 3% with a 1% increase in the price of X. the quantity demanded rises by 1% with a 3% increase in the price of X. demand decreases by 3% with a 1% increase in the price of X. P-F'P'P' 31. The competitive market pricing rule-of-thumb for profit maximization is to set: ... F+ a) MR > MC b) MR = MC c) P = MC/[1 + (1/Ep)] d) MC = MR/[1 + (1/Ep)]3011' the optimal markup on cost is 25%, the optimal markup on price is: a) 20% b) 25% c) 50% d) 100% Use the following table to answer the next question Quantity Total of output cost 0 $ 50 1 0 85 20 1 50 9 Quantity 1 U 211 of output cost 30 220 40 305 50 455 26. If the market price is $8.50, what are the prot-maximizing output and prot? a) output: 40; prot : $35 b) output = 40; prot = $0 0) output = 0; prot = -$50 (:1) output and prot cannot be determined because marginal revenue cannot be calculated 23. A 25% markup on price is equivalent to a markup on cost of: a) 25% b) 33% c) 50% d) 100%\f10. 53"!\" .0 The production function Q = 0.25X"'5 Y'"5 exhibits: constant returns to scale. increasing returns to scale. increasing and then diminishing returns to scale. diminishing returns to scale