A grower faces a price of $0.13/pound for his/her pumpkins. The buyers of the pumpkins will buy as many pumpkins as offered by the grower at this price. The pumpkin farmer evaluates his/her costs and finds that his/her production costs (average total costs) are $0.16 per pound. He/she also evaluates the marginal cost of production and finds that the marginal cost of production at the current level of production is $0.14 per pound. The average variable cost of production at the current level is $0.12 per pound. In the short run, the producer should try to:
a. Increase amount produced to get maximum profit
b. Decrease the amount produced to get maximum profit
c. Leave unchanged the amount produced to get maximum profit
d. Stop producing and
b. Decrease the amount produced to get maximum profit
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Holding other factors constant, if bad weather destroys the annual crop for carrots, it causes the supply curve for carrots to
a. Shift to the left, causing the prices of carrots to rise b. Shift to the left, causing the prices of carrots to fall c. Stay the same d. The supply curve does not shift. Only the demand curve shifts.
Changes in prices of a good causes
a. Movement along the demand curve b. Movement along the supply curve c. No effect to either curve d. Both a and b
By connecting the cost minimizing input bundles, we get the _______________
Fill in the blank(s) with the appropriate word(s).
Firms are organizations that
A. transform outputs into inputs. B. take advantage of the public. C. demand consumer outputs. D. transform resources into products.