Which of the following is true?
a. The objective of the firm is to maximize profits, by producing the amount that equates total revenue and total cost.
b. The objective of the firm is to maximize profits, by producing the amount that equates average revenue and average total cost.
c. The objective of the firm is to maximize profits, by producing the amount that equates average revenue and average variable cost.
d. The objective of the firm is to maximize profits, by producing the amount that equates marginal revenue and marginal cost.
d
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Suppose the U.S. government imposes a maximum price of $5 per gallon of gasoline, and the current equilibrium price is $3.50 per gallon. This policy represents a:
A) binding price floor. B) non-binding price floor. C) binding price ceiling. D) non-binding price ceiling.
Criticisms of the Robinson-Patman act
a. It can reduces consumer surplus b. It can reduces producer surplus c. It can creates inefficiency through unconsummated transactions d. All of the above
When we say that a firm is a price taker, we are indicating that the
a. firm takes the price established in the market then tries to increase that price through advertising. b. firm can change output levels without having any significant effect on price. c. demand curve faced by the firm is perfectly inelastic. d. firm will have to take a lower price if it wants to increase the number of units that it sells.
An example of fiscal policy occurs when the government decreases corporate income taxes.
Answer the following statement true (T) or false (F)