Can a firm make losses by producing the rate of output at which marginal revenue equals marginal cost? Why?
What will be an ideal response?
Even when a firm is producing the output rate at which marginal revenue equal to marginal cost, there is no guarantee that it makes profits. Market price is affected by market supply and market demand conditions. If price falls below average total costs, the firm makes a loss. However, the firm is doing its best and minimizing economic losses by producing the rate of output at which marginal revenue equals marginal cost.
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Refer to the table above. What is the surplus in the market when the price of a notebook is $9?
A) 16 units B) 20 units C) 24 units D) 26 units
When a $500 check is cleared from Bank A to Bank B, it does not change the money supply, because:
a. Actually, it reduces the money supply. b. Actually, it increases the money supply. c. Because one individual's checking deposit falls and another individual's rises. d. Because funds are transferred from one loan account to another. e. These funds are temporarily "out of circulation" until the ultimate owner of the funds deposits them.
Credit risk reflects:
a. A company's expected performance, level of solvency, and potential inability to service its debts. b. A company's ability to get "credit for its performance" in the stock market, which means having its share price rise at the same rate or faster than profitability. c. The variability of cash flows for the national government. d. All of the above.
When the U.S. has a current account surplus, we know that it is also
A) running a balanced trade account. B) lending to the rest of the world. C) borrowing from the rest of the world. D) suffering from negative investment income. E) none of the above