For a firm in a perfectly competitive market, if it is producing at a level of output where marginal costs are less than marginal revenue it:
A. should cut back production to increase profits.
B. should increase production to increase profits.
C. is producing a profit-maximizing quantity.
D. should invest more in advertising in order to raise revenues.
B. should increase production to increase profits.
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If the marginal cost curve is below the average variable cost curve
A. both average total cost and average variable cost are decreasing. B. average variable cost is less than average fixed cost. C. both average total cost and average variable cost are increasing. D. average total cost is increasing but average variable cost is decreasing.
Aggregate expenditures include all of the following EXCEPT
A) consumption of food. B) purchases of intermediate goods. C) purchases of a piece of capital equipment. D) purchases of guns by the government.
Refer to Figure 4-21. The figure above represents demand and supply in the market for cigarettes. Use the diagram to answer the following questions
a. How much is the government tax on each pack of cigarettes? b. What portion of the unit tax is paid by consumers? c. What portion of the unit tax is paid by producers? d. What is the quantity sold after the imposition of the tax? e. What is the after-tax revenue per pack received by producers? f. What is the total tax revenue collected by the government? g. What is the value of the excess burden of the tax? h. Is this cigarette tax efficient?
Airlines often engage in last-minute price cutting to fill remaining empty seats on a flight because this practice will generally
A) discourage rivals from matching price cuts. B) maximize marginal revenue. C) prevent rival airlines from competing in that market. D) increase marginal revenue more than marginal cost.