Lentz's Incorporated sells paper in a perfectly competitive market at a price of $2 per ream. At the profit-maximizing (cost-minimizing) level of output, average total cost is $2.50 per ream and average variable cost is $1.95 per ream
Should the firm continue to operate in the short run? Explain.
Yes. The price of the firm's product ($2) is greater than its average variable cost ($1.95). This implies that the firm's revenues will be sufficient to cover all of the firm's variable costs and some of its fixed costs. Thus, it will earn a smaller loss if it operates.
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A) the production function. B) the size of the labor force. C) the real quantity of government purchases. D) the spending and saving decisions of consumers.
The ratio of retirees to workers who make contributions to the Social Security system ________
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