Suppose that a perfectly competitive firm's marginal revenue equals $12 when it sells 10 units of output. If the marginal cost of producing the 10th unit is $14, to maximize its profit the firm should
A) do nothing because it is already maximizing its profit.
B) decrease its production.
C) increase its production.
D) shut down.
E) increase the price it charges for its product.
B
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If individuals decide to save more for retirement,
A) the supply of loanable funds will shift rightward. B) the supply of loanable funds will shift leftward. C) the demand for loanable funds will shift rightward. D) the demand for loanable funds will shift leftward. E) an excess supply of loanable funds emerges and persists.
If a person is risk averse, then as wealth increases, total utility of wealth
a. increases at an increasing rate. b. increases at a decreasing rate. c. decreases at an increasing rate. d. decreases at a decreasing rate.
Product differentiation in a monopolistically competitive market always entails more costs than benefits.
Indicate whether the statement is true or false.
Who was the economist who first proposed that governments use taxes and subsidies to correct for externalities?
A) Ronald Coase B) A. C. Pigou C) Adam Smith D) David Hume