A producer tries to maximize profits by operating at an output where:
a) MC equals price.
b) Price minus ATC is greatest.
c) MR is greater then MC.
d) the profit per unit is greatest.
Ans: a) MC equals price.
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A) vertical; infinite B) vertical; 0 C) horizontal; 1 D) horizontal; 0 E) a straight, upward sloping line through the origin; 0
In the figure above, U.S. producers' ________ from the tariff is ________
A) loss; $32 million B) loss; $64 million C) gain; $80 million D) gain; $128 million
A perfectly competitive market is in long-run equilibrium. At present there are 100 identical firms each producing 5,000 units of output. The prevailing market price is $20. Assume that each firm faces increasing marginal cost
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A) wages and rents should fall in A. B) rents and rents should rise in A. C) wages should rise and rents should fall in A. D) wages should fall and rents should rise in A.