If the market price is $2 and a perfectly competitive firm is producing 1,000 units and the marginal cost to produce the 1,000th unit is $2, which of the following is true?
A) The difference between marginal revenue and marginal cost (MR - MC) for the 500th unit is positive.
B) The firm is not maximizing profit.
C) The difference between marginal revenue and marginal cost (MR - MC) for the 500th unit is negative.
D) The difference between marginal revenue and marginal cost (MR - MC) for the 500th unit is zero.
D) The difference between marginal revenue and marginal cost (MR - MC) for the 500th unit is zero.
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If a firm produces zero units of output,
a. total revenue equals zero b. total cost equals zero c. total cost will equal explicit costs d. profit will equal zero e. the firm will earn only a normal profit
Suppose there are two firms on a river and the production processes of both require clean water. The upstream firm's process dirties the water, which it dumps back into the river. The downstream firm must clean the water before using it in its production
process. If the two firms would merge A) the external costs of the merged firm would equal the external costs of the upstream firm, which would then be passed on to its customers. B) the total costs of production fall since the external costs disappear. C) the external costs of the upstream firm are private costs after the merger. D) the internal costs of the downstream firm become external costs of the merged firm.