normal profit implies that: ueroroduetion of sples cnnes farmend incomes to fa b
ID: 1140905 • Letter: N
Question
normal profit implies that:
ueroroduetion of sples cnnes farmend incomes to fa b El demand a) inetastie demand a) if the price elasticity of the demand for ice cream is greater than one, pertectly siastic demand d Unitay ey f demand This is an eaoe of. y hich one of the folowing statements is correct increase their total revenue by raising the price of ice creamnng a lineat The price elasticity of demand stays the same at each point alone education demanded, the the total revenue of the suppliers of bread b) it a 10 per cent increase i a linear demand n university fees results in a 5 per cent reduction in the n the demand for university education is price elastic. of the demand for bread is less than one, a decrease in the p d) if the price elasticity 1.8 Normal profit implies that a) All factors employed are earning an amount equal to their opportunity costs b) Firms are earning enough to cover all the costs of production. c) Price must be greater than average variable cost. d) All of the above. 1.9 A firm finds that by producing and selling the last unit of its product, the marg the marginal cost it incurs is R35. In order to maximise profits, the firm shoule b) Decrease its output if it is a monopolistic firm, but not necessarily if it is c) Increase its output irrespective of the type of d) Decrease its output irrespective of the type of firm tis. a) Decrease its output if it is a perfectly competitive firm, but not necessari firm it is. PROGRAMME HANDBOOK: JULY 2018Explanation / Answer
(1.6) Option (d)
Overproduction increases supply, shifting supply curve rightward and lowering prices. When a fall in price decreases farmer income (= Price x quantity = Revenue), it means that demand is inelastic.
(1.7) Options (a) and (d) are partially visible only. Incomplete information.
(1.8) Option (d)
Existence of accounting profit means revenue is higher than all explicit costs, or equivalently, price is higher than average total cost (and average variable cost, since average total cost > average variable cost). Economic profit is accounting profit less opportunity cost. So, when economic profit is positive, it means that all factors are earning opportunity costs. So firms are earning enough to cover all production costs.
(1.9) Question and options are partially visible only. Incomplete information.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.