Assume a perfectly competitive firm is producing 300 units of output, P = $10, ATC of the 300th unit is $8, marginal cost of the 300th unit = $10, and AVC of the 300th unit = $6. Based on this information, the firm is:
A) earning an economic profit of $600.
B) earning an economic profit of $1,200.
C) incurring a loss of $600.
D) incurring a loss of $1,200.
A
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How might a monopolistically competitive firm continually earn economic profit greater than zero?
What will be an ideal response?
When testing joint hypothesis, you should
A) use t-statistics for each hypothesis and reject the null hypothesis is all of the restrictions fail. B) use the F-statistic and reject all the hypothesis if the statistic exceeds the critical value. C) use t-statistics for each hypothesis and reject the null hypothesis once the statistic exceeds the critical value for a single hypothesis. D) use the F-statistics and reject at least one of the hypothesis if the statistic exceeds the critical value.
The cost function is:
a. a means for expressing output as a function of cost b. a schedule or mathematical relationship showing the total cost of producing various quantities of output c. similar to a profit and loss statement d. incapable in being developed from statistical regression analysis e. none of the above
Dr. Franke, a perpetual critic of economics, notes that a recent consultant to his medical practice had advised him to raise the prices he charged in order to raise his business revenues. At a university fundraising event he commented to the Chancellor regarding "how ludicrous" some of his faculty members were in giving advice that would drive customers away. He advised the Chancellor that more
"practical, experienced faculty" such as hired by the local Technical College were needed. If demand for Dr. Franke's services is inelastic a. customers would increase and revenues drop b. customers would increase and revenues expand c. customers would decrease and revenues drop d. customers would decrease and revenues expand e. only cross-price elasticity is related to revenues