How do we determine whether a firm has maximized profits?
What will be an ideal response?
A firm maximizes profits only when it produces where marginal revenue equals marginal cost. Whenever marginal revenue exceeds marginal cost, the firm can always make more profit by increasing production; whenever marginal revenue is less than marginal cost, the firm can always make more profit by reducing production.
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This month Jones bought $10 of fresh hops for making home-brewed lager. In principle, what happens to GDP?
A) Nothing, because it involves the production of homemade beer. B) Nothing, because the hops are an intermediate good. C) GDP increases by $10. D) GDP increases by $10 as long as Jones is satisfied with the final product.
Researchers have found that countries that were settled by Europeans who planned on staying permanently were
a. more likely to protect private ownership rights and limit the power of the government. b. less likely to protect private ownership rights and limit the power of the government. c. more likely to protect private ownership, but less likely to limit the power of the government. d. less likely to protect private ownership, but more likely to limit the power of the government.