9. Rational producer behaviour

When PED is elastic, any firm wishing to increase their revenue should ........ its price

The equation showing how economists measure profit

• total profit = economic cost - total revenue

• total profit = total revenue/economic cost

• total profit = total revenue - economic cost

• total profit = average revenue - average economic cost

If total revenue is equal to total cost, the firm is making ..........

Economic cost of a company consists of:

• aggregate costs

• explicit costs

• moral costs

• implicit costs

MC curve cuts the AVC and ATC curves

• at their highest points

• at their lowest points

• at their intersection

• near the AD/AS equilibrium

Which curve is always equal to demand curve?

• TR

• AR

• MC

• AFC

TR is maximised when MR=1

• True

• False

What are the advantages of adopting CSR approach?

• attracting and keeping better workforce

• bigger revenue

• developing brand loyalty for being an ethical business

• building reputation

AFC always ..... as output increases

• increases

• falls

• stays the same

• moves in a sinusoidal motion

The marginal cost is

• the change in total production cost that comes from producing one additional unit

• the percentage change in total production cost that comes from producing one additional product

• the total production cost of additional output levels

• the change in average cost that comes from producing additional unit