Suppose a competitive firm's total revenue is $1,000,000 where MR = MC, its explicit variable costs are $900,000, its fixed costs are $90,000 of which $60,000 are sunk in the short run
If its implicit opportunity costs are $50,000, the firm should A) produce because its economic profit is positive.
B) produce because its economic profit is zero.
C) produce even though its economic profit is negative.
D) shut down.
C
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Suppose firms in an industry hire unskilled labor and skilled labor. Unskilled labor is a substitute for capital and skilled labor is a complement with capital. A decrease in the real price of capital would
A) cause the demand for labor to increase, raising wages of both skilled and unskilled labor. B) cause the demand for unskilled labor to increase and the demand for skilled labor to decrease. The wage of unskilled labor would rise relative to the wage of skilled labor. C) cause the demand for unskilled labor to decrease and the demand for skilled labor to increase. The wage of unskilled labor would decrease relative to the wage of skilled labor. D) cause the demand for both kinds of labor to decrease. Wages rates of both kinds of labor would decrease too.
Which of the following best illustrates the free-rider problem? a. A tollbooth is constructed at the entrance of a privately funded highway
b. Individuals contribute toward a national defense program by paying taxes to the government. c. Some homeowners in a mountain resort area refuse to contribute toward paving the area's only access road. d. You erect a locked gate around your swimming pool to keep out unsupervised children.
Suppose that the percentage change in supply is 50%, the price elasticity of demand is 4, and the price elasticity of supply is 1. The equilibrium price will:
A. decrease by 10 percent. B. increase by 55 percent. C. increase by 10 percent. D. decrease by 55 percent.
The total return that the owner of a stock receives is the value of the dividends received minus the capital gain or loss.
Answer the following statement true (T) or false (F)