Briefly contrast the situation where losses will be the smallest for a perfectly competitive firm based on total revenues with another situation where losses for a perfectly competitive firm will be smallest based on marginal revenue
Losses will be smallest for a perfectly competitive firm at the quantity of output where total revenues exceed total costs by the greatest amount, or where total revenues fall short of total costs by the smallest amount. Alternatively, losses will be the smallest where marginal revenue, which is price for a perfectly competitive firm, is equal to marginal cost.
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The price elasticity of demand for an agricultural product is 0.4. This value means that, when the quantity decreases 1 percent, the price
A) falls 4 percent. B) rises 4 percent. C) falls 2.5 percent. D) rises 2.5 percent. E) rises 0.25 percent.
A corn-chip maker who buys September corn futures in May at the time she signs a contract with Safeway to deliver 1000 cases of corn chips each month for the next year is
A) competing against speculators, who profit from price fluctuations. B) increasing her risk from price fluctuations. C) reducing her risk from price fluctuations. D) reducing or increasing her risk from price fluctuations, depending on what subsequently happens to the price of corn.
Which of the following equations shows unit elastic demand?
a. ED < 1 b. ED > 1 c. ED x 1 d. ED = 1
If expectations are rational, forecasting errors are pure random numbers.
Answer the following statement true (T) or false (F)