Explain two different ways to determine the profit-maximizing level of output for a firm in a perfectly competitive market
What will be an ideal response?
One way is using total revenue and total cost. The profit maximizing level of output is where the difference between total revenue and total cost is the greatest. Another way is using marginal revenue and marginal cost. The profit-maximizing level of output is where marginal revenue equals marginal cost.
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Suppose a government wants to reduce its budget deficit. It could ________.
A. encourage home production B. decrease taxes C. reduce the number of activities that are considered illegal D. increase government spending
The slope of an isocost line ________ and equals the negative of ________
A) increases as we move down the line; the ratio of input prices B) is constant; the ratio of input prices C) is constant; the ratio of the marginal products D) decreases as we move down the line; the ratio of the marginal products
If countries where wages are far lower than those in the U.S. manufacture similar but vastly cheaper products, then:
a. U.S. consumers will buy those cheaper products b. U.S. producers will lose customers c. There will be a downward pressure on U.S. wages, and reduced employment d. All of the above statements are true.
If the reserve ratio is 15 percent, the money multiplier is
a. 7.7. b. 6.7. c. 5.7. d. 15.