Answer - true.
Reason - in short run its possible for a firm to earn profits above normal profit so it can maximize its profit by either optimization of input combination or my increasing the output at the given cost.
In short run, a firm earns Maximum profit where marginal revenue and marginal cost are equal. a firm will always try to optimise its cost of inputs so that it can sell Maximum number of units at the point of production where marginal revenue equals to marginal cost to earn Maximum profit.
In the short run, the firms always use optimal input combinations that minimize the cost. true...
Which of the following statements is true about a competitive market in the long run? 1. It is possible that existing firms make negative profit. II. It is possible that existing firms make positive profit. Only II. is true. Only I. is true. O Both are true. Both are false. Question 9 (1 point) Suppose that a firm in a perfectly competitive market has sunk fixed cost and If the market price is above the minimum point on the short-run...
true or false: If the modigliani miller hypothesis holds, the firms cost of capital depends on how close is to the firms optimal leverage.
Short-run and long-run average cost curves cannot be U-shaped under constant return to scale. True or false. Explain your answer intuitively with the help of one graph.
Review of short-run profit maximization from microeconomic theory a) In the short-run, some input costs are . b) In the short-run, firms take fixed costs as . c) The revenue received from selling one additional unit of production is the . d) The cost of producing one additional unit of production is the . e) The profit maximizing quantity of production for a firm is the quantity where marginal revenue is marginal cost. f) In the short-run, the curve represents the firm’s supply curve.
Is it true that in a short-run production process, the marginal cost curve eventually slopes upward because firms have to pay workers a higher wage rate as they produce more output? Explain your answer.
The following graph shows the short-run average total cost curves and the long-run average total cost curve for a publishing firm. The five marked quantities indicate points of tangency between each short-run average total cost curve (SRATC) and the long-run average total cost curve (LRATC); for example, Qı marks the point of tangency between SRATC1 and LRATC The orange point on SRATC, indicates the firm's current output level in the short run(Q). SRATC, SRATCE SRATC SRATC, SRATC COST PERUNT OUTPUT...
9. Are the following statements true or false? Explain your answers. a) 'Isoquants are always L-shaped." b) 'A bandwagon effect is an example of negative network externality in which a consumer wishes to possess a good in part because others do." c) "The demand for washing machines is more elastic in the short run than the long run." 10.a) Complete the following table: Quantity Of Variable Total Input Output Marginal Product of Variable Input Average Product of Variable Input 50...
The following graph shows the short-run average total cost curves and the long-run average total cost curve for a publishing firm. The five marked quantities indicate points of tangency between each short-run average total cost curve (ATC) and the long-run average total cost curve (LRATC); for example, Qı marks the point of tangency between ATCi and LRATC The orange point on ATC1 indicates the firm's current output level in the short run (2) ATC, ATCs ATC ATC OUTPUT In the...
Q1: The following graph shows the current short-run average total cost (ATC), short-run marginal cost (MC), and long-run average cost (LATC) curves of a typical perfectly competitive firm that uses only labour and physical capital to produce its product and the current market price (PⓇ). S/unit MC ATC LATC B Pa E Q1 Q2 Quantity a) How many units of output would the firm choose to produce in the short run? Explain. b) Is the firm making an economic profit...
Which of the following statements are true for a competitive market in which all firms have upward-sloping marginal cost curves? A) If more firms enter the market, the market price will fall, and so will profits. TRUE B) The marginal cost is always equal to price. TRUE C) The average cost is always equal to the price. FALSE why is B true?? Is it only true in perfectly competitive market? I don't see why it is possible in other types...