Currently
where "s" and "a" refer to steel and aluminum, and Ps and Pa refer to the prices of steel and aluminum, and MPs and MPa refer to the marginal products of steel and aluminum, respectively, for a firm. Has the firm come up with the right amounts of steel and aluminum, or should it reallocate its resources to make the maximum profit?
What will be an ideal response?
No, currently the firm is not in equilibrium. Since the firm cannot touch prices, it can only manipulate the marginal products to set
which is the necessary condition for maximum profits. From the given question, we note that MPs has to fall, and MPa has to rise. This can happen only if the firm hires more S and/or less A. So the current allocation of resources is not optimal.
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Answer the following statement true (T) or false (F)
A natural monopoly is a market where
a. a single firm has control over a vital natural resource. b. many smaller firms can produce the entire market output at the same per-unit cost as could one large firm. c. a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms. d. many smaller firms can produce the entire market output at a lower per-unit cost than could one large firm.
Refer to the table above. Using the four-firm concentration ratio, the upholstered furniture industry is best categorized as:IndustryNumber of sellers% of shipments accounted for by the 4 largest companiesTires1595Upholstered furniture2,00015
A. monopolistically competitive. B. a pure monopoly. C. perfectly competitive. D. oligopolistic.
The ________ effect suggests that speculations can sometimes be destabilizing as the actions of international investors move the exchange rate away from the long-run equilibrium value consistent with fundamental economic influences.
A. overshooting B. arbitrage C. exchange rate D. bandwagon