Why should a firm not produce more than the rate of output at which marginal revenue equals marginal cost?
What will be an ideal response?
A firm maximizes its total profits when producing the rate of output at which marginal revenue equals marginal cost. If the firm produces more than this rate of production, then marginal cost will exceed marginal revenue, meaning that total profits decrease as a result of a higher production rate. Therefore, the profit-maximizing firm should not produce more than the rate of production at which marginal revenue equals marginal cost.
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Assume that there is an increased demand in the United States for European wines. If all other factors are held constant, this change will result in
A) an increase in the exchange rate for euros. B) an appreciation of the dollar. C) a movement along the demand curve for euros. D) a decrease in the value of the euro.
Figure 13-2 above illustrates an economy with an unstable commodity demand and two possible Fed policies, a constant real money supply or a constant interest. Which policy target promotes a stable economy best?
A) constant money supply, A0 to A1 B) constant money supply, B0 to B1 C) constant interest rate, A0 to A1 D) constant interest rate, B0 to B1
While Medicaid is targeted towards low-income individuals, exact qualifications are determined by _____
a. the Department of Health and Human Services b. state governments c. local governments d. judicial rulings
When a consumer's willingness to buy a good or service is influenced by the number of people who have purchased that good or service, this is called
A) a switching cost. B) an opportunity cost. C) a network effect. D) an advertising gimmick.