EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 11.6, Problem 3QQ
To determine
Profit maximizing output.
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Refer to the above figure. The firm is currently producing at Q2. The firm shouldSelect one:A.shut down.B.increase production.C.leave production as it is.D.reduce production.
Imagine a firm in a competitive market comes up with a new production method, which halves its marginal cost at all levels of Q. Fixed costs are unaffected. Which of the following statements are true?
a. The firm's AC at all levels of Q would be lower.
b. The firm would extract an innovation rent from selling at the market price with lower costs.
c. The firm's point of minimum AC would be a higher level of Q.
d. The innovation would immediately cause the market price to drop.
In markets that are not perfectly competitive, ________.
A. minimum transfer price will equal the incremental cost per unit incurred up to the point of transfer
B. companies can increase their capacity utilization only by decreasing their prices
C. the opportunity cost will equal the minimum contribution margin
D. the selling division will not have any unused capacity
Chapter 11 Solutions
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