« previous next »

Author Question: If a firm seeks to maximize total revenue, it should produce the quantity where: a. marginal ... (Read 131 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?

More than 50% of American adults have oral herpes, which is commonly known as "cold sores" or "fever blisters." The herpes virus can be active on the skin surface without showing any signs or causing any symptoms.

Did you know?

The use of salicylates dates back 2,500 years to Hippocrates’s recommendation of willow bark (from which a salicylate is derived) as an aid to the pains of childbirth. However, overdosage of salicylates can harm body fluids, electrolytes, the CNS, the GI tract, the ears, the lungs, the blood, the liver, and the kidneys and cause coma or death.

Did you know?

Approximately 15–25% of recognized pregnancies end in miscarriage. However, many miscarriages often occur before a woman even knows she is pregnant.

Did you know?

Hippocrates noted that blood separates into four differently colored liquids when removed from the body and examined: a pure red liquid mixed with white liquid material with a yellow-colored froth at the top and a black substance that settles underneath; he named these the four humors (for blood, phlegm, yellow bile, and black bile).

Did you know?

Adult head lice are gray, about ? inch long, and often have a tiny dot on their backs. A female can lay between 50 and 150 eggs within the several weeks that she is alive. They feed on human blood.

The effective temperature, or black body temperature, of the Sun (5777 K) is the temperature a black The effective temperature, or black body temperature, of the Sun (5777 K) is the temperature a black
As some groups do ethnic work, they produce a mythical long-lost heritage, as in this photo of ... As some groups do ethnic work, they produce a mythical long-lost heritage, as in this photo of ...
Greet a First-Time Client With a Firm Handshake. Greet a First-Time Client With a Firm Handshake.
Find the factor demand for labour and the amount of output it will produce. Show all ... Find the factor demand for labour and the amount of output it will produce. Show all ...
Find the factor demand for labour and the amount of output it will produce. Show all ... Find the factor demand for labour and the amount of output it will produce. Show all ...
Floral components. Anthers produce pollen and ovules produce eggs. Floral components. Anthers produce pollen and ovules produce eggs.
Video: Interpreting a cladogram Animation

For a complete list of videos, visit our video library