A firm sells a product in a purely competitive market. The marginal cost of the product at the current output is $5.00 and the market price is $5.00. What should the firm do?
A. Increase output if the minimum possible average variable cost is $5.25.
B. Decrease output if the minimum possible average variable cost is $4.75.
C. Shut down if the minimum possible average variable cost is $4.75.
D. Shut down if the minimum possible average variable cost is $5.25.
Answer: D
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The social marginal cost curve is higher than the private marginal cost curve
a. True b. False Indicate whether the statement is true or false
Selling at a price that is only slightly above the firm's cost of production is called predatory pricing
a. True b. False Indicate whether the statement is true or false
Assume a bank currently holds $75 million in demand deposits, $10 million in vault cash and $25 million deposited at the Federal Reserve. If the required reserve ratio is 15 percent, how much must the bank hold in required reserves?
a. $15.0 million b. $3.75 million c. $11.25 million d. $16.5 million e. $12.75 million.
The price of good X has a pattern such that P = $3 on Monday through Thursday of every week, and P = $2 on Fridays. If speculators begin participating in the market for good X, their actions will likely lead to a(n) ______________ in the price of good X on Monday through Thursday and a(n) _______________ in the price of good X on Friday
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease