What conditions are necessary to determine if the purely competitive firm should produce in the short run? State the marginal revenue and marginal cost conditions and the total revenue and total cost conditions
What will be an ideal response?
From a TC–TR perspective, the firm should produce if TR exceeds TC, or if TC exceeds TR by some amount less than total fixed cost. From an MC–MR perspective, the firm should produce if price is equal to, or greater than, the minimum average variable cost.
You might also like to view...
An upward shift in the Fed's reaction function is equivalent to:
A. an increase in the Fed's long-term target for inflation. B. a decline in the Fed's long-term target for inflation. C. a downward shift of short-run aggregate supply D. an upward shift of short-run aggregate supply
What does an empirical analysis of the key votes at the Constitutional Convention suggest?
(a) Merchants, manufacturers, capitalists, creditors, and public and private security holders supported a national system of government. (b) Delegates from larger and coastal states, as well as bankers and other private debt holders, were most likely to support the new Constitution. (c) Slaveholders were likely to stand in opposition to the Constitution, while farmers and debtors were either opposed or indifferent. (d) All of the above are correct.
Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles, and you are the only firm providing this service. High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand. Your monopoly would result from:
a. increasing returns to scale. b. technological superiority. c. control of a scarce resource or input. d. government-set barriers.
The overall boost to economic activity that results from a government spending increase is called the
A. multiplier effect. B. economic effect. C. butterfly effect. D. aggregate demand effect.