If the market price is $5 and a perfectly competitive firm is producing 1,200 units and the marginal cost to produce the 1,200th unit is $4.53, which of the following is true?
A) The difference between marginal revenue and marginal cost (MR - MC) for the 1,200th unit is positive.
B) The firm is maximizing profit.
C) The firm should decrease production to maximize profit.
D) The difference between marginal revenue and marginal cost (MR - MC) for the 1,200th unit is negative.
A) The difference between marginal revenue and marginal cost (MR - MC) for the 1,200th unit is positive.
You might also like to view...
Takeovers and takeover attempts waste valuable capital.
Answer the following statement true (T) or false (F)
There are two independent dealers for Sporto automobiles in a large city
The dealers decide to run a cooperative advertising campaign in which both dealers are listed in local newspapers ads, and they can purchase larger ads that are more likely to attract attention and generate more auto sales if the dealers commit more funds to the joint advertising budget. Is this an example of a cooperative constant-sum game? A) Yes, each firm can contribute zero to 100 percent of the advertising budget, so this is a constant-sum game. B) Yes, all negotiated outcomes between two firms are cooperative and constant-sum situations. C) No, the outcome of the advertising campaign depends on how much money the firms contribute to the campaign, so it is not constant sum. D) No, the firms are independent, so their interaction cannot be cooperative.
The demand curve for the product of a monopolistically competitive firm slopes downward because
A) products are perceived by consumers as different. B) products are homogeneous. C) people only care about price when they buy a good. D) the firm's goal is to maximize profits.
Which of the following is a desirable characteristic in an economy?
A. high inflation B. low unemployment C. rapid increase in the general price level D. low employment