Explain how a firm in a competitive market identifies the profit-maximizing level of production. When should the firm raise production, and when should the firm lower production?
The firm selects the level of output at which marginal revenue is equal to marginal cost. If MR > MC, profit will increase if the firm increases Q. If MR < MC, profit will increase if the firm decreases Q.
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Pork from pigs can be used to produce bacon or sausage, but not both. If the price of bacon falls for some reason, then, everything else equal: a. the price of sausage will rise
b. the price of sausage will fall. c. the resources used to raise pigs will become more expensive. d. the demand for bacon will increase.
When the price of a good is below its equilibrium level under perfect competition,
a. consumers would benefit from an expansion of output. b. some consumers are earning larger consumer's surpluses than they would in equilibrium. c. the market is not operating at maximum efficiency. d. All of the above are correct.
Which of the following illustrates the law of demand?
A. More people watch college football in March than in December. B. The number of long distance calls in the United States is greater on Christmas than on Valentine's Day. C. The prevailing wage rate in an industry determines how many people choose to work in the industry. D. College enrollment decreases when tuition increases.
What is Okun’s law? Give an example of how it works.
What will be an ideal response?