Consider a firm that operates in a perfectly competitive market. Currently the firm is producing 50 units of output and at that output level, marginal revenue is $6 . Suppose that the firm increases output by 50%. Total revenue will be
a. $300
b. $450.
c. $600.
d. the same since price will fall by 50%.
b
You might also like to view...
Which of the following is a major criticism of a monopoly as a cause of allocative inefficiency?
a. A monopolist fails to expand output to the level where the consumers' evaluation of an additional unit is just equal to its opportunity cost b. A monopolist has no incentive to produce efficiently, because even if it pays no attention to the costs of production, it will be guaranteed an economic profit c. A monopolist will always make profits therefore providing an incentive to keep prices at the level that maximizes consumer surplus d. A monopolist has an advantage because it can purchase the resources in a competitive market e. Consumer surplus would no longer be equal to producer surplus
What is the Law of One Price?
Graphically, a firm determines the optimal amount of labor to hire in its production at:
a. the point of intersection of the marginal product of labor curve and the market wage rate. b. the point of interception of the marginal revenue product curve and the horizontal axis. c. the point of intersection of the marginal revenue product curve and the market wage rate. d. the point of interception of the market wage rate and the vertical axis.
The long-run aggregate supply curve is:
A. a horizontal line. B. an upward-sloping line. C. a vertical line. D. a downward-sloping line.