At the level of output where marginal revenue equals marginal cost, price is less than average total cost but greater than average variable cost. In this instance, a profit-maximizing firm should:
a. cease production as it is incurring an economic loss
b. continue operating at that output level in the short term, since total revenue will cover all of the firm's variable costs and some of its fixed costs.
c. continue operating at that output level in the short term, since total revenue will cover all of the firm's fixed costs and a portion of its variable costs.
d. decrease output to where marginal revenue exceeds marginal cost by the greatest dollar amount.
b
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Does the text suggest that the falling prices in solar power generation come from economies of scale?
What will be an ideal response?
If smartwatches are considered substitutes for smartphones, the decline in the price of smartphones would, all else equal,
A) decrease the demand for smartwatches. B) increase the demand for smartwatches. C) increase the quantity of smartwatches demanded. D) decrease the quantity of smartwatches demanded.
The ________ the reserve ratio, the ________ the money multiplier
A) larger; larger B) smaller; smaller C) smaller; larger D) None of the above are correct.
When PPP does not hold in the short run, economists have developed an alternative short run explanatory theory based on the idea that:
a. currency values are different from other prices, since currencies are not considered assets. b. currency values are influenced in the short run because they serve as short-term assets. c. currency values will eventually result in PPP over time, so no short-run theory is needed. d. currency values are set by government entities and the IMF so the value often does not result in PPP.