A profit-maximizing firm in a competitive market will increase production when average revenue exceeds marginal cost
a. True
b. False
Indicate whether the statement is true or false
True
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The demand for a product is relatively more elastic:
a. ?When it has few substitutes ?b. In the long-run c. ?When the money spent on the product represents a small portion of a typical buyer's budget d. ?When the product is broadly defined
A busy coffee shop hires an additional barista, enabling them to serve customers nearly twice as fast. The shop responds by hiring two more baristas. After this second round of hiring, the cost of serving each customer increases. What might explain this rise?
a. Diminishing returns of labor have set in. b. The company is experiencing economies of scale. c. Fixed costs are being spread over larger output. d. Total revenues have surpassed accounting costs.