« previous next »

Author Question: Which of the following offers the fullest explanation of why price equals marginal cost is the rule ... (Read 79 times)

luminitza

  • Hero Member
  • *****
  • Posts: 555
on: Jun 30, 2018
Which of the following offers the fullest explanation of why price equals marginal cost is the rule from marginal analysis that indicates the profit-maximizing output level?
 a. If output were reduced from the profit-maximizing level, then the firm would be giving up marginal revenue that exceeds marginal cost, and thus reducing the level of profit.
  b. If output were increased from the profit-maximizing level, then the firm would be gaining marginal revenue that is less than the marginal cost incurred in producing this additional unit, and thus reducing the level of profit.
  c. Because the firm colludes with other similar firms to set price equal to marginal cost.
  d. Both a. and b. above are correct.

Question 2

The income elasticity of demand for shoes is estimated to be 1.50 . We can conclude that shoes:
 a. have a relatively steep demand curve.
  b. have a relatively flat demand curve
  c. are a normal good.
  d. are an inferior good.


nmyers

  • Sr. Member
  • ****
  • Posts: 336
Reply #1 on: Jun 30, 2018
Answer to Question 1

d

Answer to Question 2

c


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question

luminitza

  • Hero Member
  • *****
  • Posts: 555
Reply #2 on: Jun 30, 2018
Thank you :)


nmyers

  • Sr. Member
  • ****
  • Posts: 336
Reply #3 on: Jun 30, 2018
Happy to help you


« previous next »
 

Did you know?

Coca-Cola originally used coca leaves and caffeine from the African kola nut. It was advertised as a therapeutic agent and "pickerupper." Eventually, its formulation was changed, and the coca leaves were removed because of the effects of regulation on cocaine-related products.

Did you know?

Methicillin-resistant Staphylococcus aureus or MRSA was discovered in 1961 in the United Kingdom. It if often referred to as a superbug. MRSA infections cause more deaths in the United States every year than AIDS.

Methicilli ...
Did you know?

Despite claims by manufacturers, the supplement known as Ginkgo biloba was shown in a study of more than 3,000 participants to be ineffective in reducing development of dementia and Alzheimer’s disease in older people.

Did you know?

Stroke kills people from all ethnic backgrounds, but the people at highest risk for fatal strokes are: black men, black women, Asian men, white men, and white women.

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.

Elle and associates investigated the cost to Datura wrightii of producing sticky leaf trichomes. Elle and associates investigated the cost to Datura wrightii of producing sticky leaf trichomes.
The Increasing Cost of Health Care, 1960–2010 The Increasing Cost of Health Care, 1960–2010
How to find the derivatives of trigonometric functions using the chain rule (Part 1) How to find the derivatives of trigonometric functions using the chain rule (Part 1)
To find derivative us the chain rule To find derivative us the chain rule
When operating your own business, it is wise to know your cost of capital and that of the ... When operating your own business, it is wise to know your cost of capital and that of the ...
The retail price of a packaged CD is $60.00, which includes a tax of 4%. What is the actual ... The retail price of a packaged CD is $60.00, which includes a tax of 4%. What is the actual ...
Video: Digestive chemicals - types & enzymes

For a complete list of videos, visit our video library