Suppose that ABC Industries, a perfectly competitive firm, currently produces 500 units of imitation ham spread for a total cost of $1,500 . The marginal cost of the 500th unit is $20, and the marginal revenue of the 500th unit is $15 . To maximize profits, Cheapo Industries should:
a. continue to produce 500 units.
b. produce more than 500 units but less than 1500 units.
c. produce less than 500 units.
d. produce more than 1500 units.
e. stop producing at 500 units.
c
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The production possibilities frontier is the
A) maximum output that can be produced at an opportunity cost of zero. B) minimum output that can be produced when resources are used inefficiently. C) boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology. D) boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced when technology is changing. E) maximum opportunity cost combinations of goods and services.
When government revenues exceed government outlays in a particular year, this is called
A. a budget surplus. B. fiscal policy. C. the national debt. D. a budget deficit.