Happy Bagels sells its bagels for $6 each and the firm has a constant marginal cost of $4 per bagel, which is equal to its (constant) average total cost. If Happy Bagels does not sell a bagel the day it is produced, the bagel is sold as day-old for $2. If Happy Bagels is currently holding 50 bagels in inventory and the probability that Happy Bagels will sell 50 bagels or more is 0.50, which of
the following statements is true?
A) Happy Bagels is holding the profit-maximizing, optimal level of inventory.
B) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to increase its inventory.
C) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to decrease its inventory.
D) To obtain the profit-maximizing, optimal level of inventory, Happy Bagels needs to double its inventory.
A) Happy Bagels is holding the profit-maximizing, optimal level of inventory.
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Which of the following is true for a monopolistically competitive firm in the long run? a. The average cost curve of the firm lies below the marginal cost curve. b. The firm earns zero economic profit
c. The demand curve of the firm coincides with the marginal revenue curve. d. The firm earns positive economic profit.
The distinction between exogenous and endogenous variables is important because:
a. Endogenous variables are real factors while exogenous variables are nominal factors. b. Endogenous variables are fixed by definition. c. Exogenous variables are fixed by definition. d. Endogenous variables are determined within the Three-Sector-Model while exogenous variables are not. Endogenous variables are therefore treated as shocks to the Three-Sector-Model. e. Endogenous variables are determined within the Three-Sector-Model while exogenous variables are not. Exogenous variables are therefore treated as shocks to the Three-Sector-Model.