Pappy's Popcorn Emporium operates in a perfectly competitive industry and hires you as an economic consultant. Pappy's is currently producing at a point where market price equals its marginal cost. Its total revenue exceeds both its total variable cost and its total cost. You advise Pappy's to
A. raise its price so that it can increase its profit.
B. cease production immediately because it is incurring a loss.
C. continue to produce in the short run to maximize its profit.
D. lower its price immediately in anticipation of new firms entering the industry.
Answer: C
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The amount of money in the United States is determined by:
A. the combined behavior of commercial banks and the public. B. the public C. the combined behavior of commercial banks and the public, as well as actions of the Federal Reserve. D. the Federal Reserve.
Why does the government intervene in the market for research, especially medical research?
What will be an ideal response?
The opportunity costs associated with the use of resources owned by a firm are:
a. externalities. b. implicit costs. c. explicit costs. d. sunk costs.
Exchange rates are important because
A) They affect the affordability of imports B) they make exports either more or less expensive for foreign buyers C) They affect the value of foreign assets and their returns D) all of the above