What does a perfectly competitive firm do to maximize profits?
What will be an ideal response?
The perfect competitor cannot influence market price, so it must find the rate of production that maximizes its profits. The profit-maximizing output is the output at which marginal revenue equals marginal cost. If marginal revenue is greater than marginal cost, an additional unit increases revenues more than costs, so profits increase. If marginal revenue is less than marginal cost, a reduction in output of one unit reduces costs more than revenues, so profits increase. Economic profits are maximized when marginal revenue equals marginal cost.
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Other things the same, if foreign residents desired to purchase more U.S. wheat
a. the exchange rate and net exports would rise. b. the exchange rate would rise and net exports would be unchanged. c. the exchange rate would fall and net exports would be unchanged. d. the exchange rate would fall and net exports would rise.
The record of international receipts and payments is called the
A) official settlements account. B) balance of payments. C) U.S. official reserves. D) current account. E) capital and financial account.
Suppose the market demand function in a certain market where Q is measured in thousands of units is Qd = 20 - 2.5P, and the market supply function is Qs = 2.5P - 7.5. How much deadweight loss would there be in this market if the quantity bought and sold was 5,000 units?
A. $0.63 B. $62.50 C. $625 D. $6,250
In the long run, the economy will be near full employment, and crowding out is the stronger force.
Answer the following statement true (T) or false (F)