« previous next »

Author Question: If a firm seeks to maximize total revenue, it should produce the quantity where: a. marginal ... (Read 119 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?

In inpatient settings, adverse drug events account for an estimated one in three of all hospital adverse events. They affect approximately 2 million hospital stays every year, and prolong hospital stays by between one and five days.

Did you know?

Nearly 31 million adults in America have a total cholesterol level that is more than 240 mg per dL.

Did you know?

Long-term mental and physical effects from substance abuse include: paranoia, psychosis, immune deficiencies, and organ damage.

Did you know?

Less than one of every three adults with high LDL cholesterol has the condition under control. Only 48.1% with the condition are being treated for it.

Did you know?

Ether was used widely for surgeries but became less popular because of its flammability and its tendency to cause vomiting. In England, it was quickly replaced by chloroform, but this agent caused many deaths and lost popularity.

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
This modified model of Easton’s systems theory puts government decision makers as the source of pol This modified model of Easton’s systems theory puts government decision makers as the source of pol
Selected Complications of Total Parenteral Nutrition Selected Complications of Total Parenteral Nutrition
Greet a First-Time Client With a Firm Handshake. Greet a First-Time Client With a Firm Handshake.
Juan's Software Service Company is in a perfectly competitive market. Juan has total fixed ... Juan's Software Service Company is in a perfectly competitive market. Juan has total fixed ...
The total weight of Peter, David and Henry is 123 kg, Peter is 15 kg heavier than David. David ... The total weight of Peter, David and Henry is 123 kg, Peter is 15 kg heavier than David. David ...
Video: Random alignment at Metaphase I Animation

For a complete list of videos, visit our video library