Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 21, Problem 13CQ
To determine
The difference between economic profit and normal profit.
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At what level of production does the marginal cost have the least value? What is the marginal cost at this level of production?
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Economics: Private and Public Choice (MindTap Course List)
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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
- What stage of production is the increase in output that results from increase in a firm's outputs by some proportion? If the firm is operating efficiently, how can it reduce cost in the short run?arrow_forwardWhy does more inputs not necessarily translate into more output?arrow_forwardSuppose the productivity of capital and labor are as shown in the table below. The output of these resources sells in a purely competitive market for $1 per unit. Both capital and labor are hired under purely competitive conditions at $3 and $1, respectively. Units of MP of Units of MP of Capital Сapital Labor Labor 24 11 1 1 21 9 2 18 8 3 15 7 4 4 6 6. 3 1 7 7 1 0.5 8 CO LO Co COarrow_forward
- Discuss the impact of rational self-interest on each of the following decisions. Whether to attend college full time or enter the workforce full time Whether to buy a new textbook or a used one Whether to attend a local college or an out-of-town college (Production in the Short Run) Complete the following table. At what point does diminishing marginal returns set in? Units of the Variable Resource Total Product Marginal Product 0 0 — 1 10 — 2 22 — 3 — 9 4 — 4…arrow_forwardTRUE or FALSE and explain your answer fully If the cost of production is minimized, then all inputs that are used must have the same marginal productivity.arrow_forwardExplain why an increase in the price of an input must typically cause an increase in the long-run total cost of producing any particular level of output.arrow_forward
- What must an entrepreneur do to earn a profit? How do the actions of firms earning profits influence the value of resources?arrow_forward"If the law of diminishing returns did not hold, we can produce all the food the world needs in one small patch of land." Do you agree, disagree, or agree in part? Think of land as the only fixed factor and fertilizer as the only variable factor. How much food could you grow in the patch of land if the marginal product of fertilizer were constant regardless of the amount used per unit of land?arrow_forwardThe optimal level of production for any company is the level of production that either maximizes profits or minimizes losses. How does one determine the optimal level of production for any business? Explain.arrow_forward
- How does any one economic variable respond to changes in another? Why would a profit-maximizing firm expand the use of each input until its marginal revenue product equals the price of the input?arrow_forwardBriefly discuss physical capital investment and long-run average cost in relation to a perfectly competitive market.arrow_forwardAn effluent fee is imposed on a steel firm to reduce the amount of waste materials that it dumps in a river. Use the following two statements to answer this question: I. The more easily factors of production can be substituted for one another (for example, capital can be used to reduce waste water), the more effective the fee will be in reducing effluent. II. The greater the degree of substitution of capital for waste water, the less the firm will have to pay in effluent fees. (Hint: See Example 7.4 in the textbook) A. Both I and II are true B. I is true and II is false C. Both I and II are false D. I is false and II is truearrow_forward
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