Which of the following is true?
a. The objective of the firm is to maximize profits, by producing the amount that maximizes the difference between its total revenues and total cost.
b. The objective of the firm is to maximize profits, by producing the amount that maximizes the difference between its average revenue and average total cost.
c. The objective of the firm is to maximize profits, by producing the amount that maximizes the difference between its average revenue and average variable cost.
d. The objective of the firm is to maximize profits, by producing the amount that maximizes the difference between its marginal revenue and marginal cost.
a
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Why is the equilibrium price the best deal available for both buyers and sellers?
What will be an ideal response?
Suppose that the only maker of a particular type of horse hair clothing exits the industry because demand is too low. The correct analysis of this situation is that
a. the producer's decision is irrational, since monopolies are not limited by the demand curve b. the producer's decision is irrational, since monopolies never go out of business c. the producer's decision is irrational, since it could simply raise the price d. the price received by the producer was lower than the marginal cost in the long run e. the price received by the producer was lower than the average total cost in the long run
If Olivia's income increases from $40,000 to $50,000 and her tax liability increases from $6,000 to $9,000, which of the following is true?
a. Her marginal tax rate is 18 percent in this range. b. Her marginal tax rate is 30 percent in this range. c. Her average tax rate was 22.5 percent when her income was $40,000. d. The tax structure must be regressive in the range between $40,000 and $50,000.
When income effects are small:
A. there is no difference between the uncompensated demand curve and the uncompensated demand curve. B. the uncompensated demand curve will be relatively far from the compensated demand curve. C. the compensated demand curve will intersect the uncompensated demand curve. D. the uncompensated demand curve lies close to the compensated demand curve.