Marginal revenue product is
A) marginal physical product multiplied by marginal revenue.
B) marginal physical product multiplied by average variable cost of the product.
C) the price of the product.
D) the total revenue from the sale of the product sales.
Answer: A
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The cost-plus-markup theory is an inadequate explanation of relative prices because
A) it does not explain why there is a standard percentage markup in most industries. B) it is too simple, and simple theories are rarely as useful as more complex theories. C) the theory is inconsistent with observable relationships between marginal costs and prices. D) people who actually set prices do not describe the process as cost-plus.
In the short run, if a firm shuts down its maximum loss equals the amount of its fixed cost
Indicate whether the statement is true or false