Bubba's Burgers sells hamburgers in a perfectly competitive market at a price of $1.50 each. At the profit-maximizing (cost-minimizing) level of output, average total cost is $1.90 per hamburger and average variable cost is $1.75 per hamburger
Should the firm continue to operate in the short run? Explain.
No. The price of the firm's product ($1.50) is less than its average variable cost ($1.75). This implies that the firm's revenues will not be sufficient to cover all of the firm's variable costs. Thus, it will earn a smaller loss if it shuts down and earns a loss equal to its fixed costs.
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In a competitive labor market a firm will continue to employ workers for as long as an additional worker's marginal revenue product exceeds the wage rate
a. True b. False Indicate whether the statement is true or false
The factor payments measure of GDP
a. can be expressed as GDP = C + I + G + NX b. is found by summing all expenditures on intermediate and final goods and services during the year c. calculates how much value was added at each stage of production d. is found by summing all interest, rent, profit, and wages and salaries generated during the year e. calculates how much workers paid for goods and services during the year