The above figure shows the cost curves for a typical firm in a competitive market. Note that if p = 10, then MC = p at both q = 5 and q = 60. Can they both yield maximum profit? Explain
What will be an ideal response?
No, at q = 5, p = MC, but this is not profit maximization; it is profit minimization. Profits expand as output increases since MR > MC for higher levels of output. At q = 60, an increase or decrease in output causes profits to fall, so this is the profit-maximizing q. Thus one way of wording the "second order condition" for profit maximization is that MC must cut the demand curve from below.
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In Figure 4-5 above, the money market is in equilibrium
A) at points B, C, and E. B) at points A and E. C) only at point E. D) at points E and D. E) at points A, B, E, and C.
When there is an increase in the real interest rate in Japan, the Japanese yen will depreciate
a. True b. False Indicate whether the statement is true or false
A union's major source of power is its
a. high-profile leadership. b. ability to increase productivity. c. ability to threaten a strike. d. ability to deny employers the opportunity to bargain over wages.
Refer to Scenario 9.3 below to answer the question(s) that follow. SCENARIO 9.3: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 per cent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i.e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $5 on average per meal. Refer to Scenario 9.3. Total cost per week is
A. $1,000. B. $1,600. C. $2,000. D. $3,600.