A firm sells a product in a perfectly competitive market. The marginal cost of the product at the current output level of 200 units is $4. The minimum possible average variable cost is $3.50. The market price of the product is $3. To maximize profits or minimize losses, the firm should .
Multiple Choice
a) continue producing 200 units.
b) decrease production to less than 200 units.
c) increase production to more than 200 units.
d) shut down.

Aldrich and co. sold goods to donovan on credit. the amount owed grew steadily, and finally aldrich refused to sell any more to donovan unless donovan signed a promissory note for the amount due. donovan did not want to but signed the note because he had no money and needed more goods. when aldrich brought an action to enforce the note, donovan claimed that the note was not binding because it had been obtained by economic duress. was he correct? [aldrich & co. v. donovan, 778 p.2d 397 (mont.)]

Which of the following is a disadvantage of equity alliances when compared to non-equity alliances? 1. they are reflective of weaker ties between firms.2. they do not permit the exchange of explicit knowledge.3. they are more likely to bring about lack of trust and commitment.4. they require significantly higher levels of investment.

Consider the local telephone company, a natural monopoly. the following graph shows the monthly demand curve for phone services and the company’s marginal revenue (mr), marginal cost (mc), and average total cost (atc) curves. 0 2 4 6 8 10 12 14 16 18 20 100 90 80 70 60 50 40 30 20 10 0 price (dollars per subscription) quantity (thousands of subscriptions) d mr mc atc 8, 60 suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. complete the first row of the following table. pricing mechanism short run long-run decision quantity price profit (subscriptions) (dollars per subscription) profit maximization marginal-cost pricing average-cost pricing suppose that the government forces the monopolist to set the price equal to marginal cost. complete the second row of the previous table. suppose that the government forces the monopolist to set the price equal to average total cost. complete the third row of the previous table. under average-cost pricing, the government will raise the price of output whenever a firm’s costs increase, and lower the price whenever a firm’s costs decrease. over time, under the average-cost pricing policy, what will the local telephone company most likely do