QUESTION 17 Whenever marginal revenues are higher than marginal costs, a. a firm should stop its production in order to maximize profits. b. a firm should decrease its production in order to maximize profits. c. a firm should increase its production in order to maximize profits. d. none of them are correct.
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- 10. Suppose a firm must pay an annual tax, which is a fixed sum, independent of whether itproduces any output.a. How does this tax affect the firm’s fixed, marginal, and average costs?b. Now suppose the firm is charged a tax that is proportional to the number of items itproduces. Again, how does this tax affect the firm’s fixed, marginal, and average costs?i. Calculate the marginal cost, marginal revenue and profit for each unitof production. ii. How many units should the firm produce to maximise profit?(1) Use the graph to answer the question below. The quantity is measured in thousands of units. What will this firm decide to do in the long run? A-It will stay in the market because the price is above its AVC at its profit-maximizing output. B-It will leave the market because the price is below its ATC at its profit-maximizing output. C-It will increase its price to point B to earn normal profit. D-It will increase its output until its profit-maximizing output level is equal to B. E-Insufficient data to determine. (2) A dairy farmer is operating in a perfectly competitive market. The market price for milk is between the farmer's average variable cost and average total cost at the profit-maximizing level of output. What will the farmer do? A-Produce more milk. B-Produce less milk. C-Shut down in the short run. D-Operate in the short run and leave the industry in the long run. E-Insufficient information to determine (3) A firm operating in a perfectly competitive market cannot…
- I. A company produces at an output level where marginal cost is equal to marginal revenue and has the following revenue and cost levels: Total revenue = $1,450 Total cost = $1,500 Total variable cost = $1,300 What would you suggest? a. Shut down. b. Continue to produce because the loss is less than the total fixed cost. c. Increase production to lower the marginal cost. e. Raise the price. II. At current long-run production levels, the marginal revenue of a competitive firm is $15 and the marginal cost of the firm is $15. If the market is perfectly competitive, the firm should a. cut back on production. b. stop production all together. c. produce more. d. continue producing at current levels.Economics Answer "False" or "True" each of the following. Justify by relying on graphical analysis whenever possible. 3.- If the marginal income is greater than the marginal cost, the competitive company will increase its profits by increasing its production (we assume increasing marginal costs). 4.- An industry in which the production process can be done with increasing economies of scale (for any level of production) cannot be one of perfect competition. answer both asap thnxWhat specific data must a firm examine to decide the quantity of product it should produce to make maximum profit? How will the firm know if it should produce at all? How will the firm know if it mak a an economic profit?
- . 1. What area represents the firm's profit? 2.At which output level are economies of scale exhausted? 3.Does this graph most likely represent the long run or the short run? Why?If a firm's marginal revenue is below its marginal cost, an increase in production will usually: a. increase profits b. leave profits unchanged c. decrease profits d. increase marginal revenueevaluate the long run sustainability of the above scenario for the firm. explain how the graphs A and B would change in the long run
- A. How much is the fixed cost to produce the natural-organic oil? B. How many barrels of natural-organic oil should the firm produce to maximize its profit? C. How much is the price of the natural-organic oil per barrel? D. At what production level would the marginal cost exceed the average cost? E. How many barrels of natural-organic oil reflect the lowest minimum average variable cost?As long as the marginal benefit of producing each successive unit is greater than the marginal cost, a firm increase total profits by ______ (a. Increasing b.decreasing c. stopping) Its production. SO even after marginal cost begins to rise (as diminishing returns set )producers are likely _____ (a. Continue b. Not continue) to producing until marginal cost equals the marginal benefit from selling the good.What is the law of diminishing returns? Why does marginal product eventuallydiminish?b. Explain the relationship between marginal product and average product. Lin’s makes fortune cookies. Anyone can make and sell fortune cookies, so thereare dozens of producers. All fortune cookies are the same and buyers and sellersknow this fact. In what type of market does Lin’s operate? What determines theprice of fortune cookies? What determines Lin’s marginal revenue?d. What is the shape of the AFC curve and why does it have this shape?