Suppose, at its present rate of output, a perfectly competitive firm's marginal revenue exceeds both its marginal cost and its average variable cost. To maximize profit, the firm should
a. lower the price
b. raise the price
c. increase output
d. reduce output
e. maintain its current rate of output
C
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Suppose that the price elasticity of demand for mittens is –2.5 . What would happen to the quantity of mittens demanded if the price of mittens rose from $5 to $6? Use the midpoint formula in your calculations
What will be an ideal response?
With the creation of the Federal Deposit Insurance Corporation, member banks of the Federal Reserve System ________ to purchase FDIC insurance for their depositors, while non-member commercial banks ________ to buy deposit insurance
A) could choose; were required B) could choose; were given the option C) were required, could choose D) were required; were required
Between 1982 and 2002, U.S. GDP per capita grew at an average rate of 5.5 percent per year
a. True b. False Indicate whether the statement is true or false
The short-run average total cost (ATC) curve of a firm will tend to be U-shaped because
a. larger firms always have lower per-unit costs than smaller firms. b. at low levels of output, AFC will be high, while at high levels of output, MC will be high as the result of diminishing returns. c. diminishing returns will be present when output is small, and high AFC will push per-unit cost to high levels when output is large. d. diseconomies of scale will be present at both small and large output rates.