« previous next »

Author Question: If a firm seeks to maximize total revenue, it should produce the quantity where: a. marginal ... (Read 109 times)

kaid0807

  • Hero Member
  • *****
  • Posts: 515
on: Jun 30, 2018
If a firm seeks to maximize total revenue, it should produce the quantity where:
 a. marginal revenue equals zero.
 b. elasticity of demand is less than one.
 c. elasticity of demand is greater than one.
  d. marginal revenue is maximized.

Question 2

Explain the reason behind the declining gap between average cost (AC) and average variable cost (AVC) curves at higher levels of output.


KKcool

  • Sr. Member
  • ****
  • Posts: 340
Reply #1 on: Jun 30, 2018
Answer to Question 1

a

Answer to Question 2

The gap between the AC and the AVC is the average fixed cost of production, which is obtained by dividing the total fixed cost by the level of output. As output level rises, average fixed cost of production declines. Hence, the gap between the AC and the AVC also declines as output expands.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Nitroglycerin is used to alleviate various heart-related conditions, and it is also the chief component of dynamite (but mixed in a solid clay base to stabilize it).

Did you know?

After a vasectomy, it takes about 12 ejaculations to clear out sperm that were already beyond the blocked area.

Did you know?

Your skin wrinkles if you stay in the bathtub a long time because the outermost layer of skin (which consists of dead keratin) swells when it absorbs water. It is tightly attached to the skin below it, so it compensates for the increased area by wrinkling. This happens to the hands and feet because they have the thickest layer of dead keratin cells.

Did you know?

As of mid-2016, 18.2 million people were receiving advanced retroviral therapy (ART) worldwide. This represents between 43–50% of the 34–39.8 million people living with HIV.

Did you know?

In 2006, a generic antinausea drug named ondansetron was approved. It is used to stop nausea and vomiting associated with surgery, chemotherapy, and radiation therapy.

Activating a gene to produce “marathon mice.” Activating a gene to produce “marathon mice.”
Examples of the most common X-ray positions and the images they produce. Examples of the most common X-ray positions and the images they produce.
DOT placarding requirements: Table 1 materials must be placarded in any quantity, and Table 2 ... DOT placarding requirements: Table 1 materials must be placarded in any quantity, and Table 2 ...
Income per Capita versus Total Fertility Rate Income per Capita versus Total Fertility Rate
A company purchased 26 desks for $240 each and 18 chairs for $59 each. Compute the total ... A company purchased 26 desks for $240 each and 18 chairs for $59 each. Compute the total ...
Stepwise processing of pri-miRNA to produce miRNA Stepwise processing of pri-miRNA to produce miRNA
Video: Hyperglycemia Animation

For a complete list of videos, visit our video library