Lynne teaches violin lessons. She charges $10 for each lesson. Her marginal cost per lesson is $4, and her ATC per lesson is also $4 . If she can increase the number of lessons she teaches and still charge $10 per lesson, should she? How will she know when she is maximizing her profit?
Since her price exceeds her marginal cost, she is not maximizing her profit. She should increase the number
of lessons she sells until the marginal cost of an additional lesson reaches $10 . She will maximize profit
when her marginal revenue and her marginal cost are both $10.
You might also like to view...
The zero-lower-bound problem eliminates the ability of the central bank to use which of the following in implementing policy?
A) open market operations B) discount lending C) the federal funds rate D) the required reserve ratio
True or false? The Edgeworth box version of inter-personal trade requires the individuals to be in close proximity of one another
A) True, that way they can see each other's endowments and prices. B) False, begin in close proximity is not required for mutually beneficial trade to occur in the Edgeworth box. C) True, the Edgeworth box only works when there folks see "eye-to-eye." D) False, although prices are only valid if they are communicated in person.
A price ceiling:
a. is the lowest price that the law will allow to be charged in the market. b. is the highest price that the law will allow to be charged in the market. c. is the price that must be charged in the market. d. would be imposed if the government believes the market equilibrium price is too low. e. would only be applicable in the case of non-essential goods.
If a bank has reserves of $150 million and demand deposits of $1.2 billion, how much are the bank's (a) required reserves and (b) excess reserves?
What will be an ideal response?