An economist left her $100,000-a-year teaching position to work full-time in her own consulting business. In the first year, she had total revenue of $200,000 and business expenses of $100,000 . She made a(n):
a. economic profit.
b. economic loss.
c. implicit profit.
d. accounting loss but not an economic loss.
e. zero economic profit.
e
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Which of the following is true with regards to a long-run cost function?
a. The shape of the firm's long-run cost function is important in decisions to expand the scale of operations b. The long-run average cost curve is U-shaped c. The long-run average cost curve is flatter than the short-run average cost curve. d. The curve consists of the lower boundary of all the short-run cost curves e. All of the above
Firms tend to raise the price of their goods after acquiring a firm that sells a substitute good because
a. They lose market power b. There is an increase in the overall demand for their products c. The bundle has a more elastic demand than individual goods d. The bundle has a more inelastic demand than individual goods
If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?
a. Its wage always equals its marginal revenue product. b. Its wage is always greater than its marginal revenue product. c. Its wage is always total revenue minus marginal revenue product. d. Its wage is always greater than or equal to its marginal revenue product. e. Its wage is always less than or equal to its marginal revenue product.
Suppose you manage a firm with two production plants. The marginal product of labor at plant 1 is MP1 = 1400 - L1 where L1 is the number of workers employed in plant 1. The marginal product of labor at plant 2 is MP2 = 2000 - L2 where L2 is the number of workers employed in plant 2. Given that you have 1,000 workers, what is the best allocation of workers between the two plants?
What will be an ideal response?