"By producing at an output rate at which marginal revenue equals marginal cost, a firm is definitely making positive economic profits." Do you agree or disagree? Why?
What will be an ideal response?
When it produces at an output rate at which marginal revenue equals marginal cost, the firm is doing its best (providing price exceeds its average variable cost). However, the firm does not necessarily make a profit. Depending on the market conditions that affect the market price and its average variable cost, it may actually incur a loss but the loss is still the minimum as long as marginal revenue equals marginal cost.
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In year 1, the Consumer Price Index was 120 and the average nominal income was $30,000. In year 2, the Consumer Price Index was 125 and the average nominal level of income was $32,000. What happened to real income from year 1 to year 2?
A. It fell by $400. B. It rose by $600. C. It rose by $400. D. It rose by $2,000.
A mathematical expression relating the amount of output produced to quantities of capital and labor utilized is the
A) real interest rate. B) productivity relation. C) production function. D) marginal product.
The International Water Management Institute estimates that clean water could be provided to everyone on earth for an outlay of $______ a year beyond current spending on water projects.
Fill in the blank(s) with the appropriate word(s).
One unintended consequence of the various attempts to restrict farm acreage was that
A) output generally decreased, price increased, and farmers earned higher incomes. B) individual farmers intensified their efforts to harvest crops from the land still under cultivation. C) farmers' incomes remained constant in real terms. D) the land that was set aside became less productive.