"A perfect competitor should maximize total revenues." Do you agree or disagree? Explain
What will be an ideal response?
Disagree. A perfect competitor should maximize total profits instead of total revenues. Because the firm's average revenue is constant for all output levels, its total revenues increase proportionally to its output. However, because its total costs do not increase proportionally to output. As such, there is a level of output at which total profits—the difference between total revenues and total costs—are maximized.
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Refer to the above figure. Suppose the economy is at E originally, when the dollar increases in value. Which aggregate supply curve applies if the value of real GDP increases?
A) 1 B) 2 C) 4 D) 5
Cost-benefit analysis is a tool that is used
A) only by businesses. B) only by individuals and businesses. C) only by governments. D) by individuals, businesses, and governments.
The interest rate on secondary credit is set ________ basis points ________ the primary credit rate
A) 100; above B) 100; below C) 50; above D) 50; below
If demand is inelastic, an increase in the price of a good will cause total revenue to:
a. fall. b. remain constant since the decrease in quantity sold is exactly offset by the price increase. c. rise. d. rise if it is a normal good and fall if it is an inferior good.