To an economist, quitting
A. makes sense if at the quantity where MC=MR, the firm loses money.
B. Makes sense if at the quantity where MC=MR, the price is less than AVC.
C. makes sense if at the quantity where MC=MR, the price is less than ATC.
D. never makes sense.
Answer: B
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Define the production function. Discuss why the production function exhibits diminishing returns
What will be an ideal response?
In general, the costs tariffs and quotas impose on consumers are
A) large in total and large per person. B) small in total but relatively large per person. C) large in total but relatively small per person. D) small in total and small per person.
Suppose you solve a utility maximization problem, and the solution value of the Lagrange multiplier equals zero. What does this outcome imply about the problem solution?
A) You must have made an error while solving the problem. B) The budget constraint is not binding, and the constrained solution is equal to the solution to the unconstrained utility maximization problem. C) The optimal utility level for the consumer equals zero. D) The consumer's demand curve is upward sloping.
Refer to the table below. What is the profit-maximizing number of quality units for Fresh Laundry to produce?
Fresh Laundry is a firm that produces laundry detergent. The table above summarizes Fresh Laundry's product quality marginal revenue and marginal cost at various quality levels.
A) 4
B) 6
C) 10
D) 8