To maximize profit, a firm will produce the level of output where MR = MC. If a firm actually makes a profit depends on the relationship of price to average total cost. What are the three possible relationships between price and average total cost that
determine if a firm will make a profit, experience a loss, or break even?
What will be an ideal response?
If P > ATC, the firm makes a profit.
If P < ATC, the firm experiences a loss.
If P = ATC, the firm breaks even.
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Nonlinear price discrimination is
A) perfect price discrimination. B) quantity price discrimination. C) group price discrimination. D) two-part pricing.
Big Woods is a lumber firm that sells plywood sheets to local builders. If the annual holding cost of a sheet of plywood is $6 and the managers of Big Woods order 1,000 sheets of plywood, what is the total annual carrying costs of the inventory?
A) $3,500 B) $7,000 C) $3,000 D) $6,00
The problem of dead capital can be eliminated by
A) changing the structure of import tariffs. B) increasing the labor force participation rate. C) making it easier for people to establish legal ownership of productive capital. D) restricting population growth.
Explain why unskilled workers earn little economic rent, while much of an NFL quarterback's salary is rent