Suppose we advertise up to the point where the last dollar spent on advertising generates an additional dollar of sales revenue (i.e, the marginal revenue of advertising equals one)
If the full marginal cost of advertising is greater than one, then we will generate: A) less output than the profit maximizing level.
B) more output than the profit maximizing level.
C) the profit maximizing level of output.
D) We don't have enough information to answer this question.
B
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The marginal fixed cost of a firm:
a. is a positive constant irrespective of output level. b. declines as output is increased because a fixed numerator is divided by an ever-growing denominator. c. generally increases as output is increased. d. is equal to average variable cost and average total cost at their minimum points. e. is always equal to zero and is therefore ignored by economists.
According to new classical theory, if policy is correctly anticipated, expectations are formed rationally, and wages and prices are fully flexible, then an increase in aggregate demand will change Real GDP, but not the price level
Indicate whether the statement is true or false
Refer to the above graph of the representative firm in monopolistic competition. Demand is tangent to average total cost at point:
A. a. B. b. C. c. D. d.
Number of workersUnits of output0012525539541255150
Refer to Table 5.2, which gives a firm's production function. Assume that all non-labor inputs are fixed. Diminishing returns set in with the addition of the:
A. third worker. B. fourth worker. C. fifth worker. D. sixth worker.