Suppose Jason owns a small pastry shop. Jason wants to maximize his profit, and thinking back to the microeconomics class he took in college, he decides he needs to produce a quantity of pastries which will minimize his average total cost
Will Jason's strategy necessarily maximize profits for his pastry shop?
A) No; In order to maximize profit, Jason would never want to produce the quantity where average total cost is minimized.
B) Yes; Since Jason's pastry shop is in a perfectly competitive market, the only way to maximize profit is to produce the quantity where average total cost is minimized.
C) Not necessarily; Depending on demand, Jason may maximize profit by producing a quantity other than that where average total cost is at a minimum.
D) Not necessarily; This strategy will only maximize Jason's profit in the long run, but not in the short run.
C
You might also like to view...
Tying arrangements that lessen competition were made illegal by
A) the Sherman Anti-Trust Act. B) the Clayton Act. C) the Celler-Kefauver Act. D) the Robinson-Patman Act.
The belief that everyone should have exactly the same amount of income is
A. merit standard. B. egalitarian principle. C. Lorenz principle. D. comparable-worth doctrine.
A solution concept for a game is
a. a measurement of the game's complexity. b. a way of determining whether the first or second player has an advantage. c. a normative judgment of the desirability of the game's outcome. d. a rule for predicting the game's outcome when it is actually played.
The figure above shows a monopoly's total revenue and total cost curves. The monopoly's economic profit is maximized when it produces
A) 0 units of output. B) 5 units of output. C) 15 units of output. D) 20 units of output.