Microeconomics

If the government desires to raise a certain amount of revenue by taxi

If the government desires to raise a certain amount of revenue by taxing a monopoly, an ad valorem tax will A) generate the same loss of consumer surplus as a specific tax. B) generate a greater loss of consumer surplus than a specific tax. C) generate a smaller loss of consumer surplus than a specific […]

Read full post

Date: September 9th, 2020

Explain why shutting down and going out-of-business are different conc

Explain why shutting down and going out-of-business are different concepts. What will be an ideal response?   ANSWER Shutting down means that the firm seizes production with the option of starting up production any time in the future. Going out-of-business is equal to exiting the industry. This involves reducing the amount of (the fixed input) […]

Read full post

Date: September 9th, 2020

Suppose a competitive firm’s total revenue is $1,000,000 where MR = MC

Suppose a competitive firm’s total revenue is $1,000,000 where MR = MC, its explicit variable costs are $900,000, its fixed costs are $90,000 of which $60,000 are sunk in the short run. If its implicit opportunity costs are $50,000, the firm should A) produce because its economic profit is positive. B) produce because its economic […]

Read full post

Date: September 9th, 2020