Profit-maximizing firms want to ________ the difference between total revenue and total cost.
A. minimize
B. maximize
C. eliminate
D. equalize
Answer: B
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In a price leadership situation, where one firm sets a price for others to follow, the leading firm is the one with the
a. largest market share b. highest quality good c. most elastic demand curve d. least elastic demand curve e. most efficient production
Exhibit 8-11 A firm's cost and marginal revenue curves
In Exhibit 8-11, when the price is $5, the firm:
A. is making an economic profit of $21. B. should produce output equal to 10. C. is breaking even. D. should produce output equal to 7.
A positive temporary supply side shock will:
A. increase the level of potential output in the long run. B. decrease the price level in the long run. C. increase the price level in the long run. D. have no effect in the long run.
The case of Airbus, an airplane manufacturing consortium in Europe, which receives large subsidies from several European countries, best exemplifies which rationale for protectionist policies?
A. shielding workers from foreign competition B. protecting infant industries C. prevention of dumping in local markets D. helping domestic firms establish monopolies in world markets