How do we determine whether a firm has maximized profits?
What will be an ideal response?
A firm maximizes profits only when it produces where marginal revenue equals marginal cost. Whenever marginal revenue exceeds marginal cost, the firm can always make more profit by increasing production; whenever marginal revenue is less than marginal cost, the firm can always make more profit by reducing production.
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The central bank for the United States is
A) the Congressional Bank. B) the Federal Reserve System. C) Chase Manhattan Bank. D) First National Bank of New York.
In the figure above, suppose the government provides vouchers worth $15,000 per student per year. Then the market equilibrium occurs at a tuition of ________ a year and ________ million students
A) $10,000; 15 B) $25,000; 15 C) $15,000; 15 D) $15,000; 7.5 E) $20,000; 20
Refer to the above figures. A negative externality exists that has not been corrected. Price and quantity will be
A) P1 and Q1. B) P2 and Q2. C) P3 and Q3. D) P4 and Q4.
The short and long run market supply curves:
A. are equivalent. B. may differ because the set of firms that are able to produce in a market may change. C. may differ due to barriers to entry in the long run. D. do not intersect.