Exhibit 7-9 A firm's cost and marginal revenue curves
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In Exhibit 7-9, product price in this market is fixed at $7. This firm is currently operating where MR = MC. What do you advise this firm to do?
A. This firm should shut down.
B. This firm could increase profits by increasing output.
C. This firm could increase profits by decreasing output.
D. This firm should increase price.
Answer: A
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In the definition of marginal propensity to consume, marginal refers to ______.
a. the amount of extra taxes someone pays as a result of government purchases b. the total income someone receives as a result of government purchases c. the additional amount of disposable income someone receives d. the amount of additional income spent on consumer goods and services
The economic system that answers the What, How and For Whom questions using prices determined by the interaction of supply and demand is a:
A. market economy. B. command economy C. soviet economy. D. traditional economy.
When a nation starts opening up to international trade, it will see falling prices for
A. goods that it imports. B. all goods traded. C. goods that it exports. D. goods that it has a comparative advantage in.
Other things held constant, higher saving rates lead to
A. higher living standards. B. a lower standard of living. C. increases in the number of hours workers work. D. decreases in real per capita GDP.