If at an output of 4,000 units Sloan Company is making an economic profit and marginal profit is $20 per unit, the firm should
a. reduce output to maximize total profit.
b. increase output until marginal profit falls to zero.
c. do whatever is necessary to increase marginal profit.
d. There is not enough information to make a decision.
b
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There is no elasticity of substitution that is inconsistent with tastes being homothetic.
Answer the following statement true (T) or false (F)
Suppose the real money demand function is Md/P = 2400 + 0.2Y - 10,000 (r + ?e). Assume M = 4000, P = 2.0, ?e = .03, and Y = 5000. The real interest rate that clears the asset market is
A) 3%. B) 6%. C) 11%. D) 14%.
As price levels change, the purchasing power of income and wealth has varying effects on the level of consumption spending in an economy. This is called the _____
a. interest rate effect b. exchange rate effect c. wealth effect d. accelerator effect
A downward sloping demand curve indicates that
A) individuals all have the same valuation of the same product. B) individuals have different valuations of the same product. C) individuals have no valuations of a particular product. D) certain individuals are uninformed about certain aspects of the product.