A sandwich shop owner has the following information: P = MR = $4, ATC = $2, AVC = $1, MC = 4, and Q = 500 . From this, she can determine:
a. her profits are not being maximized.
b. she has earned zero economic profits.
c. she has earned economic profits of $1,000.
d. she has earned economic profits of $1,500.
e. she should sell fewer sandwiches.
c
You might also like to view...
Cartel agreements are more likely to succeed if: a. there are a large number of firms in the industry producing identical products. b. there are few firms in the industry producing identical products
c. there are a large number of firms in the industry producing differentiated products. d. there are a few firms in the industry producing differentiated products.
Water has a higher total utility (usefulness) than diamonds, but it is much less expensive than diamonds. This is because whereas diamonds are rare, water is plentiful, making the marginal utility of diamonds much higher than the marginal utility of water. What are two other goods that you can think that demonstrate that price is determined not by total utility but by marginal utility? Explain how these goods demonstrate the same principles.
What will be an ideal response?