2.In order to maximize profits, a firm will produce output where (check all that apply) a. total revenue equals total cost b. price equals marginal cost c. wage equals price times marginal product d. price equals average cost
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2.In order to maximize profits, a firm will produce output where (check all that apply)
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- 1. (a) Complete the table below given that each additional unit of output costs 100.(b) At what level of quantity produced does profit become a maximum? What is the relationship between marginal revenue and marginal cost at the quantity where profit is maximized? Explain. (c) If the producer continues to increase output as long as total revenue exceeds total cost, what will be the profit result?22. Which one of these will continuously increase as more products are produced? a. None of the choices b. Variable cost c. Average fixed cost d. Fixed costConcept: Does Fairness Matter 1 In the presence of shortages, why would a firm, such as a restaurant with people waiting for a table or a theater with people waiting for a ticket, not raise prices when doing so would seem to increase profits? A. Increasing prices might result in short run gains at the expense of long run profits. B. Increasing prices might be seen as unfair. C. Increasing prices requires the firm to pay substantial "switching costs." D. Both a and b. E. All of the above.
- 28 - The most important factor affecting a firm's production decision is the state of the supply curve. Which of the following is not a contributing factor?A) Weather conditionsB) investment surplusC) Economic GrowthD) WarE) Cost shocks2. List the features that characterize a perfect competitive market. 3. What is a perfectly competitive market? Perfectly competitive markets establish capitalist justice and maximize utility in a way that respects buyers’ and sellers’ negative rights? Explain how and what types of negative rights are respected.1. If the marginal product of an input is falling, then what must be true? Average fixed costs must be constant. Marginal cost must be rising. Average total cost must be constant. Marginal cost must be constant. 2. If Captain America and Thor decide to specialize, who should specialize in each good? Captain America should specialize in shields. Thor should specialize in hammers. Thor should specialize in both goods. Captain America should specialize in both goods. Captain America should specialize in hammers. Thor should specialize in shields. 3. Aditya regularly consumes two goods, which we’ll call good X and good Y. One day, the price of good X decreases. As a result, Aditya decreases his consumption of good Y. Based only on this information, goods X and Y seem to be: Substitutes for each other Complements for each other Normal goods Inferior goods
- 7 With the aid of a diagram, explain the profit maximising rule and explain four reasons why firms aim to profit maximise. Why might profit maximisation not be possible? (At least three developed points) What other business objective, besides profit maximisation may firms have and why might this be the case? Use a diagram and develop at least three points32. When do we say that a firm has achieved technical efficiency? a. When the price of inputs are low b. When no more outputs can be produced without adding inputs c. When the company produces new technology d. When the price of inputs are high3) The short run is a period of time in which A) nothing the firm does can be altered. B) the amount of output is fixed. C) prices and wages are fixed. D) the quantity of at least one factor of production is fixed.
- 6. Explain the following quotations; 1. " Greater production is not tantamount to greater profit"2. "Higher selling price does not equate to higher profit"5:23 The amount that a firm pays for all of the inputs that go into producing goods and services is the: O average cost. O total revenue. O total price. O total cost.1. The law of diminishing returns indicates that:a. as extra units of a variable resource are added to a fixed resource the marginal product will decline beyond some point.b. because of economies and diseconomies of scale a competitive firm's long-run average cost curve will be U-shaped.c. the demand for goods produced by purely competitive industries is down sloping.d. beyond some point the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction. Why do marginal costs tend to rise, and marginal benefits tend to fall? 2. Is it possible to avoid Diminishing Marginal Return? Why?3. Suppose that the Law of Diminishing Returns sets in immediately (that is, there is no range of output over which the Division of Labor holds). What would the short run marginal cost, average cost, and average variable cost curves look like? Explain.4. Which situation below describes the increasing returns stage of the production…
