If the market price is $2.75 and a perfectly competitive firm is producing 1,100 units and the marginal cost to produce the 1,100th unit is $2.75, which of the following is true?
A) The firm is not maximizing profit.
B) The difference between marginal revenue and marginal cost (MR - MC) for the 500th unit is zero.
C) The difference between marginal revenue and marginal cost (MR - MC) for the 500th unit is positive.
D) The difference between marginal revenue and marginal cost (MR - MC) for the 500th unit is negative.
B) The difference between marginal revenue and marginal cost (MR - MC) for the 500th unit is zero.
You might also like to view...
Which of the following is not an example of rent-seeking behavior?
A) competition for subsidies B) competition for the exclusive right to import a product C) lobbying the government to impose tariffs on certain imported products D) engaging in aggressive advertising that slams a competitor's product
Discuss the trends and implications of the following graph, especially with respect to the official start of the EMU on January 1, 1999
What will be an ideal response?
In the short run, specific taxes on a firm result in:
a. price increases which may not persist in the long run. b. an increase in consumer surplus because the tax permits spending in additional government services. c. shortages of the good being taxed. d. an increase in producer surplus because of the rise in price.
? A decrease in nominal incomes cause a:
A. ?rightward shift in the short-run aggregate supply curve. B. ?leftward shift in the short-run aggregate supply curve. C. ?rightward shift in the long-run aggregate supply curve. D. ?leftward shift in the long-run aggregate supply curve.