Assume a perfectly competitive firm sells its output for $150 per unit. It currently produces 6,000 units of output, at which output level it minimizes its average variable cost at $152 per unit. Assuming it wants to maximize its profits, it should:
a. increase output
b. decrease output, but not shut down.
c. maintain its current output rate.
d. shut down.
d
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An economy with an expansionary gap will, in the absence of stabilization policy, eventually experience a(n) ________ in the inflation rate, leading to a(n) ________ in output.
A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease
A valid and useful theory of gold prices:
A) helps to predict the movements of gold prices over time. B) may be founded on simplifying assumptions. C) need not exactly predict every change in gold prices. D) all of the above E) none of the above
Each of the following provides incentives to reduce a negative externality except:
a. merger with affected firms. b. subsidizing consumption of the good being produced. c. bargaining among firms. d. taxation of the externality.
If autonomous consumption is $5,000 . the MPC is 0.7, net taxes are $2,000 . investment spending is $4,000 . and government purchases equal $2,500, and NX = $0, what is equilibrium GDP?
a. $14,428.6 b. $33,666.7 c. $40,800 d. $43,000 e. $45,000