Firms in the market for dog food are selling in a purely competitive market. A firm producing dog food has an output of 10,000 pounds of dog food, for which it sells for $0.50 a pound. At the output level of 10,000 pounds the average variable cost is
$0.30, the average total cost is $0.70, and the marginal cost is $0.50. What would you expect the firm to do in the short run? The market in the long run?
What will be an ideal response?
The firm is operating a loss in the long run, but in the short run they will remain open. In the short run the firm is covering all variable costs and a portion of the fixed costs, meaning they should continue operating at their current level of output. In the long run, you would expect businesses to exit the market. This will allow the market price, marginal revenue, to increase. This will continue until the marginal revenue rises to the level of average total costs.
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The total amount of spending on nonresidential structures, equipment, software, residential structures, and business inventories in a given period of time is called:
A) net exports. B) government consumption and investment. C) gross private domestic investment. D) personal consumption.
Trisha's Fashion Boutique sells earrings and pendants. Trisha has two types of customers. Their willingness-to-pay for earrings and pendants are given in the table below
If Trisha bundles the earrings and pendants together, could she increase revenue? Earrings Pendant Type I 100 65 Type II 90 75
If an employer pays employees according to the volume of business revenue they individually generate, then the employer is applying the
A. contributive standard. B. productivity standard. C. merit standard. D. all of these.
What development in the 1970s and 1980s is considered one of the most extensive experiments in industrial policy in the last half-century?
A. Extensive antitrust enforcement B. Increased breakups of monopolies C. Deregulation of industries D. Fostering natural monopolies