Consider the following graph.

Is this firm allocatively efficient? Is it productively efficient? Briefly explain.

A student argues: "To maximize profit, a firm should produce the quantity where the difference between marginal revenue and marginal cost is the greatest. If a firm produces more than this quantity, then the profit made on each additional unit will be falling." Briefly explain whether you agree with this reasoning.

[Related to Solved Problem 11.4 on page 385] Santiago Delgado owns a copier store. He leases two copy machines for which he pays $20 each per day. He cannot increase the number of machines he leases without giving the office machine company six weeks’ notice. He can hire as many workers as he wants, at a cost of$40 per day per worker. These are the only two inputs he uses to produce copies.

Draw the average total cost curve and marginal cost curve for Santiago’s store. Do these curves have the expected shapes? Briefly explain.

The market for athletic shoes is intensely competitive. In 2016, Sports Authority, one of the firms in the market, declared bankruptcy and closed its 460 stores. An Associated Press article discussed the effect of the closings of the Sports Authority stores on Foot Locker’s store in the New York City borough of Manhattan and quoted Foot Locker’s CEO as stating: “We realized a long time ago that we couldn’t be everything to everybody [in one store]. We have definitive brands and experiences.”

Why would Foot Locker’s CEO emphasize that the store will have “definitive brands and experiences?” Wouldn’t trying to be “everything to everybody” be a better strategy because the store might attract a larger number of customers? Briefly explain.

In 1916, Ford Motor Company produced 500,000 Model T Fords, at a price of $440 each. The company made a profit of$60 million that year. Henry Ford told a newspaper reporter that he intended to reduce the price of the Model T to $360, and he expected to sell 800,000 cars at that price. Ford said, “Less profit on each car, but more cars, more employment of labor, and in the end we get all the total profit we ought to make.”

Did Ford expect the total revenue he received from selling Model Ts to rise or fall following the price cut?

Consider the following graph.

At the profit-maximizing level of output, how much economic profit is this firm earning? Briefly explain.

Is it possible for marginal revenue to be negative for a firm selling in a perfectly competitive market? Is it possible for marginal revenue to be negative for a firm selling in a monopolistically competitive market? Briefly explain

William Germano served as the vice president and publishing director at the Routledge publishing company. He once gave the following description of how a publisher might deal with an unexpected increase in the cost of publishing a book:

It’s often asked why the publisher can’t simply raise the price [if costs increase] It’s likely that the editor [is already] charging as much as the market will bear. In other words, you might be willing to pay $50.00 for a book on the Brooklyn Bridge, but if production costs [increase] by 25 percent, you might think$62.50 is too much to pay, though that would be what the publisher needs to charge. And indeed the publisher may determine that $50.00 is this book’s ceiling—the most you would pay before deciding to rent a movie instead.

How would the elasticity of demand for published books affect the ability of the publishing company to raise book prices when costs increase?

[Related to the Apply the Concept on page 464] In Chicago, Green Summit appears to be running nine different restaurants, with names such as Butcher Block, Milk Money, and Leafage. In reality, all the food for these restaurants is cooked in one central kitchen, and none of the restaurants have physical locations. The brands exist only as Web sites and on the delivery containers. An article on chicagotribune.com quoted the firm’s CEO as saying, “I don’t really think anybody cares. They just want really high-quality food.”

Does Green Summit’s strategy increase or decrease productive efficiency in the restaurant business? Does the strategy increase or decrease allocative efficiency? Does it increase or decrease the well-being of its customers? Briefly explain.

Indicate whether each statement is TRUE or FALSE. If you think the statement is false, rewrite it to make it true. An object located at the secondary principal focus. F’ of a converging lens has an Image that is exactly the same size as the object.

Indicate whether statement Is TRUE or FALSE. If you think the statement Is false, rewrite It to make it true. Light is a form of energy.

William Germano served as the vice president and publishing director at the Routledge publishing company. He once gave the following description of how a publisher might deal with an unexpected increase in the cost of publishing a book:

It’s often asked why the publisher can’t simply raise the price [if costs increase] It’s likely that the editor [is already] charging as much as the market will bear. In other words, you might be willing to pay $50.00 for a book on the Brooklyn Bridge, but if production costs [increase] by 25 percent, you might think$62.50 is too much to pay, though that would be what the publisher needs to charge. And indeed the publisher may determine that $50.00 is this book’s ceiling—the most you would pay before deciding to rent a movie instead.

Does the model of monopolistic competition seem to fit Germano’s description? If a publisher does not raise the price of a book following an increase in its production cost, what will be the result?

Further, positive technological change is defined as _________.

William Germano served as the vice president and publishing director at the Routledge publishing company. He once gave the following description of how a publisher might deal with an unexpected increase in the cost of publishing a book:

It’s often asked why the publisher can’t simply raise the price [if costs increase] It’s likely that the editor [is already] charging as much as the market will bear. In other words, you might be willing to pay $50.00 for a book on the Brooklyn Bridge, but if production costs [increase] by 25 percent, you might think$62.50 is too much to pay, though that would be what the publisher needs to charge. And indeed the publisher may determine that $50.00 is this book’s ceiling—the most you would pay before deciding to rent a movie instead.

According to what you have learned in this chapter, how do firms adjust the price of a good when there is an increase in cost? Use a graph to illustrate your answer.

William Germano served as the vice president and publishing director at the Routledge publishing company. He once gave the following description of how a publisher might deal with an unexpected increase in the cost of publishing a book:

It’s often asked why the publisher can’t simply raise the price [if costs increase] It’s likely that the editor [is already] charging as much as the market will bear. In other words, you might be willing to pay$50.00 for a book on the Brooklyn Bridge, but if production costs [increase] by 25 percent, you might think $62.50 is too much to pay, though that would be what the publisher needs to charge. And indeed the publisher may determine that$50.00 is this book’s ceiling—the most you would pay before deciding to rent a movie instead.

According to what you have learned in this chapter, how do firms adjust the price of a good when there is an increase in cost? Use a graph to illustrate your answer.