Asked by
Arien Drozy
on Nov 04, 2024
Verified
Strawberries, a normal good, are produced in a perfectly competitive market. Average consumer incomes increase. This will cause the individual strawberry farmerʹs marginal revenue to ________ and their profit-maximizing level of output to ________.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Profit-Maximizing Level
The point at which a firm produces at a level where the difference between total revenue and total cost is the greatest.
Marginal Revenue
The additional income earned by selling one more unit of a good or service.
Normal Good
A product or service whose demand increases as consumers' income increases, typically reflecting higher purchasing power.
- Identify the impacts of fluctuations in the market (for instance, firms entering or exiting, shifts in demand) on strategies of businesses and the balance of the market.
- Illustrate the guideline of profit maximization and how it is executed in markets with perfect competition.
Verified Answer
CH
Learning Objectives
- Identify the impacts of fluctuations in the market (for instance, firms entering or exiting, shifts in demand) on strategies of businesses and the balance of the market.
- Illustrate the guideline of profit maximization and how it is executed in markets with perfect competition.