The following data apply to a firm operating in perfect competition.
The firm’s profit maximizing output (in units) is most likely:
B 、in excess of 24.
Which of the following statements with respect to Giffen and Veblen goods isleast accurate?
A 、Giffen goods are “inferior,” whereas Veblen goods are “high-status” goods.
B、 The highly negative income effect overpowers the substitution effect forboth types of goods.
C、 Both types of goods demonstrate the possibility of a positively slopingdemand curve.View answer resolution【Answer to question 1】A
A is correct. Under perfect competition, economic profits are maximized when marginal revenue equals marginal cosplayt—in this case, marginal cosplayt crosses $10 per unit. Profits are maximized at 23 units of production because marginal cosplayt is in excess of marginal revenue at 24 units.
C is incorrect. It represents the minimum total cosplayt point for the given data, not the profit maximizing point.
B is incorrect. At and beyond 24 units, marginal cosplayts exceed marginal revenue.【Answer to question 2】B
B is correct. The overwhelming nature of the highly negative income effect over the substitution effect is applicable to Giffen goods only. Veblen goods are highly valued, high-priced “status” goods; consumers may tend to buy more of a Veblen good if its price rises.
A is incorrect. It is true that Giffen goods are “inferior” whereas Veblen goods are “high-status” goods.
C is incorrect. It is true that both Giffen goods and Veblen goods demonstrate the possibility of a positively sloping demand curve