Question

TRUE OR FALSE 1. Short run producer surplus is equal to profits plus fixed costs 2....

TRUE OR FALSE

1. Short run producer surplus is equal to profits plus fixed costs

2. When Maximizing Profits a firm will always be equating the marginal expense of labor to the marginal expense of capital

3. Going to the dentist is an example of a situation that might involve a principal agent problem.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. False

Producer surplus is the area that is above supply curve and below equilibrium price.

2. False

For profit maximisation firm employs labor where marginal product of labor is equal to real wage rate anf employs capital where marginal product of capital is equal to real rental rate.

3. True

Going to the dentist is an example of principal agent problem where dentist is the agent and you are the principal to advise the principal in making decisions about treatment or to make decisions on the principal's behalf.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
State whether the following statements are true, false or uncertain and briefly explain the reason for...
State whether the following statements are true, false or uncertain and briefly explain the reason for your choice. Your grade will largely depend on the quality of your explanations. a. Suppose that a firm’s short-run total cost function is STC= 0.1q2 + 4q +100. Will the producer surplus at P=$15 be $302.5? b. Suppose that a firm is price taker. If the price is equal to marginal cost, then the profit is being maximized. c. If a firm wished to...
True/False 1. Suppose a firm can only vary the quantity of labor hired in the short...
True/False 1. Suppose a firm can only vary the quantity of labor hired in the short run. An increase in the cost of capital will increase the firm's marginal cost. 2. A horizontal demand curve for a firm implies that the firm is selling in a competitive market. 3. If a profit-maximizing firm finds that, at its current level of production, MR < MC, it will operate at a loss.
1. In the short run, the firm ________ change the number of workers it employs but...
1. In the short run, the firm ________ change the number of workers it employs but ________ change the size of its plant. A) can; can B) can; cannot C) cannot; can D) cannot; cannot 2.Jill runs a factory that makes lie detectors in Little Rock, Arkansas. This month, Jill's 34 workers produced 690 machines. Suppose Jill adds one more worker and, as a result, her factory's output increases to 700. Jill's marginal product of labor from the last worker...
1. When total revenue is less than variable costs in the short run, what will a...
1. When total revenue is less than variable costs in the short run, what will a firm in a competitive market do? Select one: a. It will continue to operate as long as average revenue exceeds marginal cost. b. It will shut down. c. It will continue to operate as long as average revenue exceeds average fixed cost. d. It will always exit the industry. 2. Consider a monopoly that is able to practice perfect price discrimination. Which of the...
1. (50 marks) True/False/Uncertain Answer each of the following statements True/False/Uncertain. Give a full explanation of...
1. True/False/Uncertain Answer each of the following statements True/False/Uncertain. Give a full explanation of your answer including graphs where appropriate. (When in doubt, always include a fully labeled graph.) A) Firms typically make investment choices over a small time horizon when profit maximizing. B) The Cobb-Douglas production function can exhibit increasing, decreasing, or constant returns to scale. C) An isoquant represents every point of economically efficient production for a given quantity. D) In the short-run, the marginal product of labor...
1. Answer each of the following statements True/False/Uncertain. Give a full explanation of your answer. A...
1. Answer each of the following statements True/False/Uncertain. Give a full explanation of your answer. A fully labeled graph is a welcome addition to any answer (if applicable), though it is not necessary.                                                                                                 A) In the short-run, average variable cost converges to average total cost as output increases. B) The tragedy of the commons states that individuals will overproduce a common                       resource. C) When evaluating social welfare, a government must take a subjective stance on what...
As a firm increases the level of output that it produces, short-run average fixed cost rises...
As a firm increases the level of output that it produces, short-run average fixed cost rises and then falls. remains constant since fixed costs are constant. decreases. decreases up to a particular level of output and then increases. Flag this Question Question 22 pts Suppose that a firm is currently producing 500 units of output. At this level of output, TVC = $1,000 and TFC = $2,500. What is the firms ATC? $2 $5 $7 $10 Flag this Question Question...
1. For a perfectly competitive firm in the short run, the ____________ price is at minimum...
1. For a perfectly competitive firm in the short run, the ____________ price is at minimum average variable cost and the break-even price is at minimum ________ cost.    a. Shut-down: Marginal b. Shut-down: Average c. Operating: Average d. Operating: Marginal 2. The short-run supply curve for a perfectly competitive firm is a _______ line at zero quantity if the price is below minimum average variable cost but is the marginal cost if the price is at or above minimum...
Question 1 When a production facility is in production and running well, it adds a new...
Question 1 When a production facility is in production and running well, it adds a new worker. You would expect this worker to produce more than prior workers. less than prior workers. the same as prior workers. Question 2 "Fill in the blank" question: select the correct answer. When production is just beginning, more efficient use of each input can be achieved by -Select- adding new variable inputs adding new fixed inputs reducing fixed inputs reducing variable inputs Question 3...
1) Consider a firm that uses only capital and labor. In the short-run the firm: A....
1) Consider a firm that uses only capital and labor. In the short-run the firm: A. Will never face diminishing returns to labor B. Faces diminishing returns to labor because capital cannot be changed C. Faces increasing returns to labor because capital is variable D.Faces diminishing returns to capital because labor can be changed 2) Tim started a lawn mowing business during summer break using his family's lawn mower, which statement best explains the shape of the production function? A....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT