Assume That a Firm Is Producing at Its Profit-Maximizing Level

question 20

Multiple Choice

Assume that a firm is producing at its profit-maximizing level of output. A decrease in fixed cost implies that:

• A) marginal revenue will increase but marginal cost will decrease.
• B) marginal revenue will not change but marginal cost will decrease.
• C) neither average total cost nor marginal cost will change.
• D) neither marginal revenue nor marginal cost will change.
• E) both marginal revenue and marginal cost will decrease.

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Definitions:

Mechanical Advantage

The factor by which a mechanism multiplies the force put into it, enabling the lifting or moving of heavier loads with less effort.

Pitch Diameters

The effective diameter of a screw thread, halfway between the crests and roots, used in measuring and specifying thread sizes.

Diametral Pitches

Diametral pitches refer to the number of teeth per inch of the diameter of a gear, which determines the size of the teeth and the pitch of the gear.

Ratchet Wheel

A wheel or gear with teeth cut in a way that allows motion in one direction only, often used in mechanisms requiring incremental movement.