If the market price is $3 and a perfectly competitive firm is producing 2,200 units and the marginal cost to produce the 2,200th unit is $2.85, which of the following is true?
A) The firm is maximizing profit.
B) The firm should decrease production to maximize profit.
C) The difference between marginal revenue and marginal cost (MR - MC) for the 2,200th unit is negative.
D) The firm should increase production to maximize profit.
D) The firm should increase production to maximize profit.
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Suppose that when one person consumes a good, it is possible to provide it to others at no additional cost. Such a good is called
a. nonexcludable. b. nonrivalrous. c. a free good. d. a Clarke good.
According to the EPA, human health risk assessment includes all of the following steps EXCEPT
a. hazard identification d. risk characterization b. dose-response assessment e. analysis phase c. exposure assessment
Sometimes the government deals with externalities by creating laws to regulate behavior instead of using taxes to correct the market failure. So, requiring auto manufacturers to install a device called a catalytic converter which removes some toxins from exhaust may be preferable to a gas tax that reduces driving levels. This route is often preferred because:
A. the cost of the externality is unknown. B. it requires less technological development. C. it more heavily penalizes drivers who consume more gas than those who consume less. D. only car drivers pay for the externality.
Which of the following is true in a market economy?
A. Central planners determine answers to the basic economic questions. B. Resources are used efficiently. C. The distribution of wealth is equal. D. Information for production and distribution decisions pass directly to buyers from the government.