The above figure illustrates a perfectly competitive firm. If the market price is $10 a unit, to maximize its profit (or minimize its loss) the firm should
A) shut down.
B) produce between 10 and less than 30 units.
C) produce 30 units.
D) produce more than 30 units and less than 40 units.
E) produce 40 units.
A
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If the Fed sells $1 billion of short-term securities issued by the Bank of Japan and at the same time purchases $1 billion of short-term securities issued by the U.S. Treasury,
A) the monetary base will decline by $1 billion. B) the monetary base will rise by $1 billion. C) the Fed has conducted an unsterilized foreign-exchange intervention. D) the Fed has conducted a sterilized foreign-exchange intervention.
If the government sets a specific tax and an ad valorem tax so that they raise the same amount of tax revenue, why does the ad valorem tax reduce output less than the specific tax?
What will be an ideal response?