The change in total profit when a firm increases its output by one unit equals
a. total revenue minus total cost
b. total revenue minus marginal revenue
c. marginal revenue minus marginal cost
d. total revenue minus marginal cost
e. marginal revenue plus marginal cost
C
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For a monopolistic competitive firm, which of the following is TRUE in the long run?
A) ATC is minimized. B) Economic profit is zero. C) P = MC. D) all of the above
Suppose the U.S. government encouraged consumers to trade in their old automobiles for more efficient, new models by paying up to $5,000 for the old automobiles. These consumers who did trade in their old automobiles to take advantage of the government
offer would be exemplifying the economic idea that A) people are rational. B) people respond to economic incentives. C) optimal decisions are made at the margin. D) equity is more important than efficiency.
If Henry, a perfectly competitive lime grower in Southern California, can sell his limes at a price greater than his average total cost, Henry will
A) incur an economic loss. B) incur an accounting loss. C) have an incentive to shut down. D) make an economic profit. E) make zero economic profit.
Suppose the point (Q = 3,400, P = $20) is the midpoint on a certain downward-sloping, linear demand curve. Then
a. a decrease in price from $18 to $16 will increase total revenue. b. a decrease in price from $24 to $22 will decrease total revenue. c. a decrease in the price from $21 to $19 will decrease total revenue. d. the maximum value of total revenue is $68,000.