Which of the following examples is the only scenario that maximizes profits?
a. Cheap Energy stays at q1.
b. Cheap Energy moves from q1 to q*.
c. Cheap Energy moves from q1 to q2.
d. Cheap Energy stays at q2.
b. Cheap Energy moves from q1 to q*.
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If the Fed conducts an open market purchase of Treasury bonds, this will
A) encourage banks to make more loans and will increase the money supply. B) encourage banks to make more loans and will decrease the money supply. C) cause banks to reduce their loans and will increase the money supply. D) cause banks to reduce their loans and will decrease the money supply.
Policy activists' hope that they can undertake successful stabilization policy is ________ by the fact that natural real GDP ________ during recessions
A) improved, falls B) worsened, falls C) improved, increases D) worsened, increases
If a firm raises the price of its product, its total revenue will
a. always increase b. increase only if demand is price inelastic c. increase only if demand is price elastic d. remain constant, regardless of price elasticity of demand e. never increase
To maximize its profit, a monopolistically competitive firm produces at the output level at which
a. its price elasticity of demand equals one. b. MR = MC. c. its D curve is tangent to its ATC curve. d. MR = AVC.