« previous next »

Author Question: If a firm seeks to maximize total revenue, it should produce the quantity where: a. marginal ... (Read 129 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?

The first war in which wide-scale use of anesthetics occurred was the Civil War, and 80% of all wounds were in the extremities.

Did you know?

The strongest synthetic topical retinoid drug available, tazarotene, is used to treat sun-damaged skin, acne, and psoriasis.

Did you know?

Elderly adults are at greatest risk of stroke and myocardial infarction and have the most to gain from prophylaxis. Patients ages 60 to 80 years with blood pressures above 160/90 mm Hg should benefit from antihypertensive treatment.

Did you know?

Though Candida and Aspergillus species are the most common fungal pathogens causing invasive fungal disease in the immunocompromised, infections due to previously uncommon hyaline and dematiaceous filamentous fungi are occurring more often today. Rare fungal infections, once accurately diagnosed, may require surgical debridement, immunotherapy, and newer antifungals used singly or in combination with older antifungals, on a case-by-case basis.

Did you know?

Thyroid conditions cause a higher risk of fibromyalgia and chronic fatigue syndrome.

A model of anxiety in which stressful events or a changing mental condition can produce unfavorable A model of anxiety in which stressful events or a changing mental condition can produce unfavorable
The first commercially successful typewriter, manufactured in quantity beginning in 1874, surely fue The first commercially successful typewriter, manufactured in quantity beginning in 1874, surely fue
Compression ratio is the ratio of the total cylinder volume (when the piston is at the bottom of ... Compression ratio is the ratio of the total cylinder volume (when the piston is at the bottom of ...
World Total Energy Consumption by Fuel Type World Total Energy Consumption by Fuel Type
Total allowable and actual catch, Grand Bank Atlantic Cod 1959 -2012 Total allowable and actual catch, Grand Bank Atlantic Cod 1959 -2012
Hydrogen burns to produce energy and water Hydrogen burns to produce energy and water
Video: Blood Flow Through the Kidneys

For a complete list of videos, visit our video library