Explain the three fundamental decisions that firms in perfectly competitive markets mustmake. Explain how these decisions are interrelated
What will be an ideal response?
Firms must decide how much to produce and supply in the output market, which technology to use, and how much of each input to demand. These three decisions are interrelated because the decision of how much to supply depends on costs of production, which in turn depends upon the technology used and the amount of inputs used. The use of inputs will depend on the amount of output produced.
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The table above shows a total product schedule. Suppose that labor costs $20 per worker and fixed costs are $60. The total variable cost of producing 80 units equals
A) less than $50. B) more than $50 and less than $70. C) more than $70 and less than $90. D) more than $90 and less than $120. E) more than $120.
In the early 1950s, economist William Baumol demonstrated that a lower interest rate ________ the demand for money in a model without bond speculation ________ a "broker's fee" for conversions between money and bonds
A) raises, and without B) raises, but with C) lowers, and without D) lowers, but with E) does not affect, and without
What is the total profit to the monopolist from selling the goods separately?
a. $4,500 b. $6,300 c. $7,000 d. $6,200
The slope of the total revenue curve equals
a. marginal revenue, which equals price for a perfectly competitive firm b. marginal revenue, which is greater than price for a perfectly competitive firm c. marginal revenue, which is less than price for a perfectly competitive firm d. average revenue, which is greater than price for a perfectly competitive firm e. average revenue, which is less than price for a perfectly competitive firm