This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Lentz's Incorporated sells paper in a perfectly competitive market at a price of 2 per ream. At the ... (Read 66 times)

james9437

  • Hero Member
  • *****
  • Posts: 568
on: Jun 29, 2018
Lentz's Incorporated sells paper in a perfectly competitive market at a price of 2 per ream. At the profit-maximizing (cost-minimizing) level of output, average total cost is 2.50 per ream and average variable cost is 1.95 per ream.
 
  Should the firm continue to operate in the short run? Explain.

Question 2

Evaluate the following statement. As long as I am still enjoying this candy I am going to keep buying and eating more of it.
 
  What will be an ideal response?


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

jjorrostieta

  • Sr. Member
  • ****
  • Posts: 298
Reply #1 on: Jun 29, 2018
Answer to Question 1

Yes. The price of the firm's product (2) is greater than its average variable cost (1.95). This implies that the firm's revenues will be sufficient to cover all of the firm's variable costs and some of its fixed costs. Thus, it will earn a smaller loss if it operates.

Answer to Question 2

This confuses marginal and total utility. While it might be true that he is still receiving positive marginal utility from eating more of the candy it might not be the most rational thing for him to do in order to maximize his total utility. That is, he might be better off redirecting some of this expenditures toward another good that has a higher marginal utility per dollar.


james9437

  • Member
  • Posts: 568
Reply 2 on: Jun 29, 2018
Great answer, keep it coming :)

carojassy25

  • Member
  • Posts: 299
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

Approximately 25% of all reported medication errors result from some kind of name confusion.

Did you know?

The cure for trichomoniasis is easy as long as the patient does not drink alcoholic beverages for 24 hours. Just a single dose of medication is needed to rid the body of the disease. However, without proper precautions, an individual may contract the disease repeatedly. In fact, most people develop trichomoniasis again within three months of their last treatment.

Did you know?

Not getting enough sleep can greatly weaken the immune system. Lack of sleep makes you more likely to catch a cold, or more difficult to fight off an infection.

Did you know?

Throughout history, plants containing cardiac steroids have been used as heart drugs and as poisons (e.g., in arrows used in combat), emetics, and diuretics.

Did you know?

There used to be a metric calendar, as well as metric clocks. The metric calendar, or "French Republican Calendar" divided the year into 12 months, but each month was divided into three 10-day weeks. Each day had 10 decimal hours. Each hour had 100 decimal minutes. Due to lack of popularity, the metric clocks and calendars were ended in 1795, three years after they had been first marketed.

Firms Incorporated into U.S. Steel Firms Incorporated into U.S. Steel
A medical records department. (Paper records are becoming obsolete, replaced by electronic records.) A medical records department. (Paper records are becoming obsolete, replaced by electronic records.)
Use the same paper towels to turn off the faucet. Use the same paper towels to turn off the faucet.
Degreasing the consommé with a paper towel Degreasing the consommé with a paper towel
The price of rice in a small country is currently $6 per pound. In order to help low-income ... The price of rice in a small country is currently $6 per pound. In order to help low-income ...
Cost = $99.49; Rate of markup based on cost = 32%. Find the markup and selling price. Cost = $99.49; Rate of markup based on cost = 32%. Find the markup and selling price.
Video: Hierarchical Sequencing Method - Sequence Tagged Sites

For a complete list of videos, visit our video library