A purely competitive firm is producing at the point where its marginal cost equals the price of its product. If the firm increases its output, then total revenue will:
A. decrease and profits will increase.
B. increase and profits will decrease.
C. increase and profits will increase.
D. decrease and profits will decrease.
Answer: B
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One argument advanced in favor of not increasing the income tax on individuals with high income is that
A) increasing income tax increases wealth which contributes to increases in GDP. B) increasing the income tax on these individuals will reduce economic efficiency. C) not increasing income taxes will discourage corporations from increasing investment. D) increasing the income tax affects mostly middle-income and low-income individuals who are already paying heavy income taxes.
Suppose the United States can produce either 1 ton of potato or 0.5 tons of wheat per worker per year, while Ireland can produce either 3 tons of potatoes or 2 tons of wheat per worker per year. There can be mutual gains from trade if: a. the United States specializes in potatoes because of its comparative advantage in producing potatoes
b. the United States specializes in wheat production because of its absolute advantage in producing wheat. c. the United States specializes in wheat production because of its comparative advantage in producing wheat. d. the United States specializes in potatoes because of its absolute advantage in producing potatoes.
The supply of loanable funds is not
A. upward sloping. B. affected by people’s plans for fixed purchases. C. a function of the interest rate. D. the MRP of investment.
Additional investments in machines that enhance the ability to produce goods and services imply that
a. the owners of the investments will necessarily have to borrow funds. b. the owners of the investments will necessarily have to reduce their current consumption. c. someone will have to reduce current consumption. d. future consumption will have to be reduced.