The shutdown decision can be restated in terms of producer surplus by saying that a firm should produce in the short run as long as
A) revenue exceeds producer surplus.
B) producer surplus is positive.
C) producer surplus exceeds fixed cost.
D) producer surplus exceeds variable cost.
E) profit and producer surplus are equal.
B
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If policymakers attempt to offset a favorable inflation shock with monetary ________, the resulting long-run equilibrium will be at ________ inflation rate compared to allowing the self-correcting mechanism return the economy to potential output.
A. easing; a lower B. easing; a higher C. tightening; a higher D. tightening; a lower
Thinking of a Gap store as a production plant, explain why Gap is making a decision to reduce the size of its stores. Is Gap's decision a long-run decision or a short-run decision?
What will be an ideal response?
A monopolistically competitive firm that is profitable in the short run will face competition that will eventually eliminate the firm's profits in the long run. But the firm can stave off competition and continue to earn economic profits if
A) it can lobby the government to establish a price floor for its product. B) it can find new ways to differentiate its product. C) it can move to another country where there is less competition. D) it can successfully sue its competitors for copyright infringement.
A sign that the Federal Reserve is moving to lower interest rates would be
A) a reduction in bank reserves. B) an increase in margin requirements. C) a widening gap between the Treasury bill yield and the discount rate. D) a narrowing gap between the Treasury bill yield and the discount rate.