Consider the straight-line demand curve illustrated in the above figure. At what price is total revenue maximized?
A) at a price of $8
B) at a price of $6
C) at a price of $4
D) More information is needed to determine the price at which total revenue is maximized.
C
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Suppose a perfectly competitive firm, which is initially in long-run equilibrium experiences a decrease in the wages it must pay its employees. In the short run, which of the following will occur?
A) ATC will shift up and MC will shift down, causing the firm to incur a loss. B) ATC will shift down and MC will shift up, causing the firm to earn a positive economic profit. C) ATC and MC will shift down, causing the firm to earn a positive economic profit. D) ATC and MC will shift up, causing the firm to incur a loss.
There is an externality present only when
A) private costs equal social benefits. B) private benefits equal social benefits. C) private costs or benefits diverge from social costs or benefits. D) private costs equal social costs.