Explain how the short-run supply curve of the competitive firm is derived
Since the firm is either minimizing losses or maximizing profit in the short run if it produces where MC = P above minimum AVC for any price above minimum AVC, the quantity can simply be read off the MC curve. Thus the MC curve above minimum AVC becomes the firm's short-run supply curve.
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If national saving decreases,
A) the sum of domestic investment and foreign investment must increase. B) the sum of domestic investment and net exports must increase. C) the sum of domestic investment and foreign investment must decrease. D) foreign investment must increase to cover the loss.
A firm will increase its spending on advertising until
A) it has monopolized the market. B) it has deterred all future entry. C) the marginal benefit of advertising is zero. D) the marginal benefit of advertising equals the marginal cost of advertising.