A firm with two factories, one in Michigan and one in Texas, has decided that it should produce a total of 500 units of output in order to maximize profit. The firm is currently producing 200 units in the Michigan factory and 300 units in the Texas factory. At this allocation between plants, the last unit of output produced in Michigan added $5 to total cost, while the last unit of output produced in Texas added $3 to total cost. The firm
A. should produce 250 units in each factory.
B. should produce more in the Michigan factory and less in the Texas factory.
C. should produce more in the Texas factory and less in the Michigan factory.
D. is maximizing profit; should keep producing 200 units in Michigan and 300 units in Texas.
Answer: C
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A) It is difficult to limit the resale of food items from those who pay low prices to those who would have to pay high prices from the concession stand. B) Once people are in the theater, concession stands have monopoly power and can charge everyone the same high prices for food. C) Although the elasticity of demand for admission differs among customers, most people have the same the elasticity of demand for food items. D) Concession stand personnel are too busy to ensure that different people pay different prices for food items.
Consider the two graphs above. Suppose that technological progress is expected to reduce the future cost of capital goods. This would ________ the desired level of the capital stock, as depicted in graph ________
A) increase; B B) increase; A C) decrease; B D) decrease; A
Which is the most accurate statement about the Federal Trade Commission?
A. It has never stopped a merger from taking place. B. It is the most powerful anti-trust agency in the federal government. C. Its job is limited to preventing false and deceptive advertising. D. It has a role in anti-trust enforcement.
Suppose that in the clothing market, production costs have fallen, but the equilibrium price and quantity purchased have both increased. Based on this information we can conclude that:
A. the supply of clothing has grown faster than the demand for clothing. B. demand for clothing has grown faster than the supply of clothing. C. the supply of and demand for clothing have grown by the same proportion. D. there is no way to determine what has happened to supply and demand with this information.