A firm is currently producing at the point where MC = MR. The situation for the firm at this point is P = $5, Q = 100, ATC = $6, AVC = $5.50. What do you recommend this firm do?
A. Shut down, because ATC > P.
B. Increase production above the current output rate, because MC = MR at this rate of output.
C. Continue to produce the current output rate, because P > AVC.
D. Shut down, because AVC > P.
Answer: D
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Attempting to answer the question of how much a life is worth is a job undertaken by
A) macroeconomists. B) forensic economists. C) economic theorists. D) environmental economists.
If wages and prices are flexible, then an anticipated change in the money supply will cause wages and prices to __________ the actual inflation rate
A) increase at the same rate as B) increase at a higher rate than C) increase at a slower rate than D) cannot be exactly predicted
Figure 7-15
In Figure 7-15, we would expect a move along the production indifference curve from A to B if
A. the price of machines falls. B. the price of labor falls. C. output falls. D. the product price rises.
Suppose that the U.S. can make 15 cars or 20 bottles of wine with one year's worth of labor. France can make 10 cars or 18 bottles of wine with one year's worth of labor. From these numbers, we can conclude
a. the U.S. has a comparative advantage in the production of cars. b. France has a comparative advantage in the production of wine. c. the U.S. has a absolute advantage in the production of wine. d. all of the above are conclusions are correct.