A firm will continue to produce additional output, as long as marginal revenue is greater than marginal cost.
a. true
b. false
Answer: a. true
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In a perfectly competitive market, the type of decision a firm has to make is different in the short run than in the long run. Which of the following is an example of a perfectly competitive firm's short-run decision?
A) the profit-maximizing level of output B) how much to spend on advertising and sales promotion C) what price to charge buyers for the product D) whether or not to enter or exit an industry E) whether or not to change its plant size
Which of the following will not generally be true of a monopolistic competitor operating in the long run?
a. marginal cost exceeds average total cost b. marginal revenue = marginal cost c. production in the range of economies of scale d. price greater than marginal revenue
If an agent is risk neutral and a principal is risk averse, which of the following contracts would be efficient in risk bearing?
A) A fixed fee is paid to the agent. B) A fixed fee is paid to the principal. C) An hourly rate is paid to the agent. D) The agent enjoys a share of the profit.
Refer to Figure a. Charlie and Joe both want to ride shotgun with their mother, so they play a game of rock-paper-scissors to determine who gets to sit in the front seat. In the table, -1 represents a loss, 1 a win and 0 a tie, and Joe's payoff is shown in the upper left-hand corner of each cell, while Charlie's appears in the lower right-hand corner. If Joe knows Charlie thinks he always throws scissors, what is Joe's best response?
A. Rock
B. Paper
C. Scissors
D. The answer cannot be determined from the information given.