Typically a firm's "economic profit" will be
What will be an ideal response?
less than its accounting profit.
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A firm with market power faces the following estimated demand and average variable cost functions:Qd = 39,000 - 500P + 0.4M - 8,000PRAVC = 30 - 0.005Q + 0.0000005Q2where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $2. Total fixed cost is $100,000. What is the profit-maximizing choice of output?
A. 10,000 units B. 12,000 units C. 0 units, the firm shuts down D. 16,000 units E. 8,000 units
We may note that unemployment:
A. only occurs during times of recession. B. is highest during times of economic booms. C. tends to increase during times of economic recovery. D. exists at any time during the business cycle.
At an equilibrium level of output in a pure monopoly:
A. P > MC and P = minimum ATC. B. P > MC and P > minimum ATC. C. P = MC and P = minimum ATC. D. P = MC and P > minimum ATC.
It is the custom for paper mills located alongside the Layzee River to discharge waste products into the river. Operators of hydroelectric generating plants on the river find they must clean up the river's water before it flows through their equipment. Refer to the above information. If nothing is done to correct this situation:
A. the price of electricity will be lower than it should be. B. there will be an overallocation of resources to the production of electricity. C. there will be an overallocation of resources to the production of paper goods. D. there will be an underallocation of resources to the production of paper goods.