A firm in a competitive market currently produces and sells 500 doorknobs for a price of $10 per doorknob. Which of the following events would decrease the firm's average revenue?
a. The firm increases its output above 500 doorknobs.
b. The firm decreases its output below 500 doorknobs.
c. The market price of doorknobs rises above $10.
d. The market price of doorknobs falls below $10.
d
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Many people have turned to the Internet to get the news. This has caused the circulation numbers of newspapers to fall drastically, which in turn caused their:
A. Average fixed costs to increase B. Average total costs to decrease C. Average fixed costs to decrease D. Marginal costs to increase
A Hicksian, or compensated, demand curve reflects:
A. only the substitution effect of a price change. B. only the income effect of a price change. C. both the income and substitution effects of a price change. D. neither the income nor the substitution effects of a price change.