Describe the profit-maximizing firm’s decision about how much to spend on innovation.
What will be an ideal response?
The profit-maximizing firm will decide how much to spend on innovation in the same way it makes its output decision—using marginal analysis. The firm will choose the level of spending on innovation where the MR from innovation equals the MC of innovation. If the firm chooses any other level, either the MR > MC and it could increase profit by spending more, or if MR < MC then it could increase profit by spending less.
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Which of the following is used to argue that the self-interest of public policymakers will often lead to actions that are inconsistent with the preferences of the voters they represent?
A) the median voter theorem B) the voting paradox C) rent seeking D) transitivity of voters' preferences
The federal government uses the revenue from the FICA (Federal Insurance Contribution Act) tax to pay for
a. unemployment compensation. b. the salaries of members of Congress. c. Social Security and Medicare. d. housing subsidies for low-income people.
Describe the relationship between average total cost and marginal cost
What is a four-firm concentration ratio, and how is it used?
What will be an ideal response?