Suppose a single-input production function has initially increasing but eventually decreasing marginal product -- and suppose we know that an interior solution is profit maximizing. In this case, the first order condition for the profit maximization problem
A. is necessary for identifying the profit maximizing production plan.
B. is sufficient for identifying the profit maximizing production plan.
C. is both necessary and sufficient for identifying the profit maximizing production plan.
D. is neither necessary nor sufficient for identifying the profit maximizing production plan.
Answer: A
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Indicate whether the statement is true or false
Refer to Figure 9.2. Whenever a CD is sold, 5% of the revenue goes to the artist and the remainder of the revenue goes to the record company. The graph above depicts R, the total revenue from sales; (0.95)R, the record company's share; and C, the cost of producing the CD (which the record companies bears). At what quantity would the artist prefer to produce the CD?
A. 0
B. Q1
C. Q2
D. Q3
The administrative burden of regulating price in a monopolistically competitive market is
a. small due to economies of scale. b. large because price is usually below marginal cost. c. large because of the large number of firms that produce differentiated products. d. small because firms produce with excess capacity.
A nation's saving equals its ________ income less its spending on ________.
A. nominal; investment B. real; investment C. current; current needs D. nominal; net taxes