Pie-Oh-My, a monopolistically competitive firm, is baking 80 gourmet pies per day and selling each pie for $25. At that production level ATC is $40, AVC is $30, AFC is $10, and both MR and MC are $16. This firm should
A. increase output to the point where price equals marginal cost.
B. continue to produce 80 pies, as price is greater than AFC.
C. produce zero pies and pay fixed costs.
D. decrease output to the point where marginal cost equals average cost.
Answer: C
You might also like to view...
Decisions by ________ about their holdings of currency and by ________ about their holdings of excess reserves affect the money supply
A) borrowers; depositors B) banks; depositors C) depositors; borrowers D) depositors; banks
The price of a first-class stamp in 1957 was 3 cents, and it is 49 cents in 2014. From this we know that
A) both the relative and the absolute price of first-class stamps increased from 1957 to 2014. B) the money price of first-class stamps increased from 1957 to 2014 but the absolute price of first-class stamps stayed constant. C) the money price of first-class stamps increased from 1957 to 2014 and the relative price of first-class stamps decreased. D) the money price of first-class stamps increased from 1957 to 2014, but we can't tell if the relative price of first-class stamps increased or decreased without more information.
In the absence of property rights, inventors have ________ incentive to invest in innovations and ________ incentive to disclose how to use and make their innovations.
A) less; less B) more; less C) more; more D) less; more
Relative to a franchisee, a manager of a company owned store is more likely to
a. Work very hard b. Not work as hard c. Work only evenings d. Work only night shifts