A competitive firm operating in the short run is producing at the output level at which ATC is at a minimum. If ATC = $8 and MR = $9, in order to maximize profits (or minimize losses), this firm should:
a. reduce output.
b. increase output. Correct
c. shut down.
d. do nothing; the firm is already maximizing profits.
b. increase output. Correct
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The basic approach in marginal analysis is to compare a policy's total benefits with its total costs
a. True b. False Indicate whether the statement is true or false
Diminishing marginal product is closely related to
a. diminishing total cost. b. diminishing marginal cost. c. increasing price. d. increasing marginal cost.
A street vendor sells a replica of a pair of designer shoes to a young woman who believes the shoes are authentic. The street vendor is engaging in
a. both moral hazard and adverse selection. b. neither moral hazard nor adverse selection. c. moral hazard, but not adverse selection. d. adverse selection, but not moral hazard.
A linear demand curve
A. will have an ever rising total revenue function. B. becomes less elastic as price falls. C. always has a constant elasticity. D. can have constant elasticity if its slope is more than one.