Consider a firm operating in a perfectly competitive market. At its current output of 200 units, marginal revenue is $25 . At this output, average total cost is decreasing and equals $22 . Given this information, what should the firm do?
a. Continue to produce 200 units, because this maximizes profits
b. Increase output beyond 200 units, since a higher output will yield the profit maximizing output level.
c. Decrease output below 200 units, since a lower output will result in the profit maximizing output level.
d. More information is needed to determine the firm's next step.
b
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According to the classical system, saving is a function of
a. income. b. the real interest rate. c. the real wage. d. the profitability of firms. e. all of the above.
The failure of markets to adequately protect the environment can viewed either as a problem of
a. externalities or as a problem of common resources. b. externalities or as a problem of private goods. c. the overprovision of public goods or as a problem of the underprovision of private goods. d. club goods or as a problem that arises when the quantity of excludable goods exceeds the socially-efficient quantity.
a competitive market is important to society because it directs resources toward projects that
What will be an ideal response?
Economic growth is difficult for poor countries because
A. governments must fund capital production and research out of tax revenues. B. resources must be taken away from consumer goods to pay for capital goods. C. those wealthy enough to invest in domestic industries may choose to invest abroad instead. D. All of the choices are true.