Author Question: The market price for wallets is 20 . Your technology is such that at your most efficient production ... (Read 55 times)

PhilipSeeMore · **on:** Jun 30, 2018

The market price for wallets is 20 . Your technology is such that at your most efficient production point, the average total cost of producing a wallet is 2.50 . Your manager runs into your office and shouts, Boss Average costs are rising Average costs are rising To make a profit-maximizing decision, you should:
a. d or e.
b. immediately stop production.
c. completely ignore your manager.
d. ask the manager about the marginal cost.
e. ask the manager about the average total cost.

Question 2

Suppose that when price is 10, quantity supplied is 20 . When price is 6, quantity supplied is 12 units. The price elasticity of supply is:
a. 0.5.
b. 0.8.
c. 1.0.
d. 1.5.
e. 2.0.