Why should a perfect competitor produce at which price equals marginal cost?
What will be an ideal response?
For a perfect competitor, its market price equals marginal revenue. Because profits are maximized when marginal revenue equals marginal cost, a perfect competitor will therefore maximize profits by producing at marginal revenue equals marginal cost. A lower or higher level of output than that profit-maximizing output level will only result in lower profits.
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At the profit-maximizing level of output for a pure monopoly ________.
A. price is less than marginal cost B. total revenue is greater than total cost C. price is equal to marginal cost D. price is greater than marginal cost
Because it is a unit of account, money
A) increases transaction costs. B) reduces the number of prices that need to be calculated. C) does not earn interest. D) discourages specialization.
Which of the following helps explain why depositors sometimes put their funds in demand deposits rather than NOW accounts?
A) Demand deposits pay interest, whereas NOW accounts do not pay interest. B) Businesses may not hold NOW accounts. C) Checks may be written against demand deposits, but not against NOW accounts. D) Demand deposits are more liquid than NOW accounts.
Suppose that a monopolist must choose between two points on its demand curve: it can sell 100 units for $3 each, or it can sell 150 units for $2 each. Which of the following is true?
a. The monopolist is facing elastic demand. b. The monopolist is facing unit elastic demand. c. The monopolist is facing inelastic demand. d. The monopolist is facing perfectly elastic demand. e. The elasticity of demand cannot be determined with the information given.