9.If a firm is maximizing its profit and is earning positive economic profit, which of the following must be true?  Average total cost < price; marginal cost = marginal revenue Average total cost > price; marginal cost = marginal revenue Average total cost < average revenue; marginal cost > marginal revenue Total cost > total revenue; marginal cost > marginal revenue Total cost = total revenue; marginal cost > marginal revenue

Economics:
10th Edition
ISBN:9781285859460
Author:BOYES, William
Publisher:BOYES, William
Chapter23: Profit Maximization
Section: Chapter Questions
Problem 15E
icon
Related questions
Question

9.If a firm is maximizing its profit and is earning positive economic profit, which of the following must be true? 

Average total cost < price; marginal cost = marginal revenue
Average total cost > price; marginal cost = marginal revenue
Average total cost < average revenue; marginal cost > marginal revenue
Total cost > total revenue; marginal cost > marginal revenue
Total cost = total revenue; marginal cost > marginal revenue

 

12.A dairy farmer is operating in a perfectly competitive market. The market price for milk is between the farmer's average variable cost and average total cost at the profit-maximizing level of output. What will the farmer do?

Produce more milk
Produce less milk
Shut down in the short run
Operate in the short run and leave the industry in the long run
Insufficient information to determine
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Total Cost
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Economics:
Economics:
Economics
ISBN:
9781285859460
Author:
BOYES, William
Publisher:
Cengage Learning
ECON MICRO
ECON MICRO
Economics
ISBN:
9781337000536
Author:
William A. McEachern
Publisher:
Cengage Learning
Essentials of Economics (MindTap Course List)
Essentials of Economics (MindTap Course List)
Economics
ISBN:
9781337091992
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning