ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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1/2 cake per hour
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2 cakes per hour
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10 cakes per hour
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15 cakes per hour
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Detailed explanation-1: -A bakery operating in competitive markets sells its output for $20 per cake and hires labor at$10 per hour. To maximize profit, it should hire labor until the marginal product of labor is a. 1/2 cake per hour.
Detailed explanation-2: -Answer and Explanation: The correct option is (B). New firms to enter the market, even without government subsidies.
Detailed explanation-3: -ANSWER: In a competitive market where firms are earning economic profits, new firms will have an incentive to enter the market. This entry will expand the number of firms, increase the quantity of the good supplied, and drive down prices and profit.
Detailed explanation-4: -Which of the following conditions hold for a firm maximizing its profits? Correct Answer(s) Revenue gained from the next unit sold equals the cost of producing it.