A firm finds that at its MR = MC output, its TC = $1,000, TVC = $800, TFC = $200, and total revenue is $900. This firm should:
A. shut down in the short run.
B. produce because the resulting loss is less than its TFC.
C. produce because it will realize an economic profit.
D. liquidate its assets and go out of business.
Answer: B
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If the production of a good causes an external cost, then the efficient quantity is
A) equal to the quantity at which the marginal benefit equals marginal cost. B) less than the quantity at which the marginal benefit equals the marginal cost. C) more than the quantity at which the marginal benefit equals the marginal cost. D) the quantity at which the marginal private benefit is greater than the marginal social benefit. E) None of the above answers is correct.
Stockholders
A) select the managers of a corporation. B) select the employees of a corporation. C) select the board of directors of a corporation. D) all of the above.