Using Figure 9.1, explain what a firm would do in the short run if the market price of its product were at P2 and it produced Q2 . Is the firm earning an economic profit? An operating profit? Explain
What will be an ideal response?
The firm would continue to produce in the short run. The firm is suffering an economic loss since the market price is less than its average total cost. However, at this price the firm is able to earn an operating profit since the price is greater than the average variable cost.
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The mean (average) income of 25 employees working in a firm is $1,754 per month. What is the total income of all the employees?
A) $40,000 B) $43,850 C) $56,225 D) $63,950
If the total revenue received by sellers of DVDs increases by 20 percent when price increases by 10 percent, then demand for DVDs is
A) perfectly elastic. B) unitary elastic. C) inelastic. D) elastic.
On the island country of Sunshine where the unit of currency is fish, net exports are 50 fish, saving is 250 fish, net taxes are 100 fish, and the government budget deficit is 175 fish. What is the value of investment?
A) 375 fish B) -375 fish C) 25 fish D) -25 fish
Explain what a model is
What will be an ideal response?