At its current output level, a firm’s marginal revenue exceeds its marginal cost and its price is less than its average cost. Therefore, it should:
A. |
Increase output until MR = 0 |
|
B. |
Increase its price |
|
C. |
Decrease output until MR = MC |
|
D. |
Shutdown Immediately |
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E. |
Increase output until MR = MC |
Option E (Increase output until MR=MC) is correct.
It is because profit is maximized when MR and MC are equal. Therefore, firm should increase output until this condition.
At its current output level, a firm’s marginal revenue exceeds its marginal cost and its price...
At a firm's current level of production, marginal revenue is less than marginal cost (MR<MC). A profit- maximizing firm will decrease prices. increase output O decrease output. shut down.
At a firm's current level of production, marginal revenue is greater than marginal cost (MR>MC).A profit-maximizing firm will increase prices. increase output decrease output. O shut down.
7) If, for a given output level, a perfectly competitive firm’s price is less than its average variable cost, the firm a. should increase output. b. should shut down. c. should increase price. d. is earning a profit.
a. A monopolist finds that at its current level of output the marginal cost of production is $9, the average total cost is $9.95,the average variable cost is $9.75 and its marginal revenue is $9.45. What would you recommend that the monopolist do to increase profits? One word answer is not enough. Explain. b. A monopolist determines that at the current level of output the marginal revenue is $9.00 and its marginal cost is $10. What should the monopolist do to...
Exhibit 8-9 A firm's cost and marginal revenue curves In Exhibit 8-9, product price in this market is fixed at $14. This firm is currently operating where MR = MC. What do you advise this firm to do? Group of answer choices A. This firm should shut down. B. This firm could increase profits by increasing output. C. This firm could increase profits by decreasing output. D. This firm should continue to operate at its current output. E. This firm...
15. When marginal cost is less than average total cost, a. marginal cost must be falling. b. average variable cost must be falling. c. average total cost is falling. d. average total cost is rising. 16. Which of the following is not a characteristic of a competitive market? a. Buyers and sellers are price takers. b. Each firm sells a virtually identical product. c. Entry is limited d. Each firm chooses an output level that maximizes profits. 17. If a...
If a firm's marginal cost exceeds its marginal revenue, then a. profit is negative b. the firm should shut down c. cutting back production will increase profits d. the firm should reduce its per-unit cost by increasing its output
If the competitive firm suddenly notices that price exceeds its marginal cost, it should: Select one: a. shut down. b. decrease output. c. raise its price. d. increase output.
Help with 14-16 please. 14. A Monopoly: A. Will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output. B. Will realize an economic profit if ATC exceeds MR at the profit-maximizing/loss-minimizing level of output c. Will realize an economic loss if MC intersects the down-sloping portion of MR D. Always realizes an economic profit. MC ATC AVC 15. At equilibrium, the profit-maximizing monopolist facing the situation shown in the graph above will face: A. Average...
1) 1) A single-price monopolist is currently producing an output level where P-520, MR = $13, ATC = $15, and MC = $14. In order to maximize profits, this monopolist should A) shut down B) decrease production and increase price. C) not change his output level, because he is currently at the profit-maximizing output level. D) increase production and reduce price. E) there is insufficient information to make a recommendation 2) 2) Consider a monopolist that is able to distinguish...