Lentz's Incorporated sells paper in a perfectly competitive market at a price of $2 per ream. At the profit-maximizing (cost-minimizing) level of output, average total cost is $2.50 per ream and average variable cost is $1.95 per ream
Should the firm continue to operate in the short run? Explain.
Yes. The price of the firm's product ($2) is greater than its average variable cost ($1.95). This implies that the firm's revenues will be sufficient to cover all of the firm's variable costs and some of its fixed costs. Thus, it will earn a smaller loss if it operates.
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A politician states "taxes should be raised to provide more spending on school lunch programs." This is ____________
Fill in the blank(s) with the appropriate word(s).
If a perfectly competitive firm finds that it is producing an amount of output such that MR > MC and P > AVC, it will
A) leave the industry. B) decrease its output. C) increase its output. D) not change its behavior.
New growth theory
A) states that the rate of technological change is caused by economic incentives. B) states that the rate of technological change is determined outside the working of the market system. C) states that the rate of technological change is unaffected by economic incentives. D) does not adequately explain the factors that determine productivity.
If you reject a joint null hypothesis using the F-test in a multiple hypothesis setting, then
A) a series of t-tests may or may not give you the same conclusion. B) the regression is always significant. C) all of the hypotheses are always simultaneously rejected. D) the F-statistic must be negative.