Darlene runs a fruit and vegetable stand in a medium-sized community where there are many such stands. Her weekly total revenue equals $3,500 . Her weekly total cost of running the stand equals $3,500, consisting of $2,500 of variable costs and $1,000 of fixed costs. An economist would likely advise Darlene to:
a. shut down as quickly as possible because the stand is generating losses
b. keep the stand open because it is generating a normal profit.
c. keep the stand open for a while longer because she is covering all of her variable costs and some of her fixed costs.
d. keep the stand open for a while longer because she is covering all of her fixed costs and some of her variable costs.
b
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When there is a deflationary gap _______ GDP is greater than _______ GDP.
Fill in the blank(s) with the appropriate word(s).
Assume you are planning to invest $200 each year for four years and will earn 8 percent per year. Determine the future value of this annuity due problem if your first $200 is invested now.
The owners of sports franchises often complain that free-agency (open bidding for player services) threatens their profitability and thus their long-run viability. Given your knowledge of perfect competition, which of the following is correct?
A) Team owners might be correct in as much as free-agency bids up the price of players so that economic profits from those players equal zero. B) Team owners might be correct in as much as free-agency bids up the price of players so that economic profits from those players is negative. C) Team owners are lying, as free-agent salaries are still much too low. D) Team owners are telling the truth, as free-agent salaries are much too high.
In the standard model of pure competition, a profit-maximizing firm will shut down in the short run if:
A. Marginal cost is greater than average revenue B. Average cost is greater than average revenue C. Average fixed cost is greater than average revenue D. Total revenue is less than total variable cost