At the level of output where marginal revenue equals marginal cost, price is less than average total cost but greater than average variable cost. In this instance, a profit-maximizing firm should:
a. cease production as it is incurring an economic loss
b. continue operating at that output level in the short term, since total revenue will cover all of the firm's variable costs and some of its fixed costs.
c. continue operating at that output level in the short term, since total revenue will cover all of the firm's fixed costs and a portion of its variable costs.
d. decrease output to where marginal revenue exceeds marginal cost by the greatest dollar amount.
b
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If Toni has an absolute advantage in both sewing and ironing when compared to Tom, then
A) they might benefit from trading, but we need more information to determine in which task they should specialize. B) neither Toni nor Tom can benefit from trading with each other. C) Toni should specialize in sewing, and Tom should specialize in ironing. D) Toni cannot benefit from trading with Tom, but Tom can benefit from trading with Toni. E) Tom cannot benefit from trading with Toni, but Toni can benefit from trading with Tom.
Economies of scale result as a firm increases in size and expands its use of resources. Productivity increases and fixed production costs are spread over an increased number of goods and services
Which of the following are types of economies of scale? (a) Command economies (b) External economies (c) Open economies (d) Closed economies