Assume a competitive price-searcher firm is earning an economic profit. The marginal revenue from selling an additional unit is $30 and the marginal cost of producing that additional unit is $23 . The firm should
a. change neither its price nor its output level
b. reduce its price and increase its output level
c. increase its price and reduce its output level
d. reduce both its price and its output level
e. increase both its price and its output level
B
You might also like to view...
An unemployed individual decides to spend the day fishing. The opportunity cost of fishing is
A) zero, because the person doesn't have a job. B) the cost of bait, any other monetary expenses, and the value of the individual's wages while he was working. C) the cost of bait and any other monetary expenses. D) the cost of bait, any other monetary expenses, and the value of the best alternative use of the individual's time.
Piper consumes Ragu spaghetti sauce exclusively. She claims that there is a clear taste difference and that competing brands of spaghetti sauce leave an unsavory taste in her mouth. However, in a blind taste test, Piper is found to prefer generic store-brand spaghetti sauce to Ragu spaghetti sauce eight out of ten times. The results of Piper's taste test would reinforce claims by critics of brand
names that a. consumers are always willing to pay more for brand names. b. brand names cause consumers to perceive differences that do not really exist. c. brand names are always preferred to generics. d. consumers are only willing to buy generics if they are less expensive.