A Producer of Two Fixed Proportion Outputs a and B,producing

question 11

Multiple Choice

A producer of two fixed proportion outputs A and B,producing Q_A = Q_B with marginal revenues MR_A and MR_B,should equate marginal cost to:

• A) the maximum (MR_A, MR_B).
• B) the minimum (MR_A, MR_B).
• C) MR_A, which should equal MR_B.
• D) the horizontal sum of MR_A and MR_B.
• E) the vertical sum of MR_A and MR_B.

---

Definitions:

Efficient Scale

The level of production that minimizes the average total cost of producing a product or service.

Long-Run Equilibrium

A state in which all firms in a market are making zero economic profit, leading to a situation where no firms enter or exit the industry.

Long-Run Equilibrium

A state in which all aspects of the economy, including supply and demand, are in balance, and all economic agents have fully adjusted to any changes.

Decrease in Demand

refers to a situation where consumers' desire and ability to purchase a product or service diminishes, leading to a downward shift in the demand curve.