Question

13) T/F If the marginal revenue is less than the marginal cost, a profit-maximizing price taker should increase its output.

14) T/F When a firm is operating in a price-taker market, marginal revenue is always less than the market price.

15) T/F When an economist says a firm is earning zero economic profit, this implies that the firm will likely have to declare bankruptcy in the near future unless market conditions change.

16) T/F In the year 2008, nearly three out of four business firms in the United States were organized as corporations.

17) T/F The limited liability of stockholders in the corporate business structure makes it easier to raise equity capital.

Answer 1

13) when the marginal revenue is less than marginal cost, production of one extra unit brought more cost than profit. So profit Maximizing manufacturer should decrease it production. So the statement is false.

14) when a firm is operating a price taker market. The marginal revenue is equal to market price. MRn=TRn-TRn-1.So the statement is false.

15) Zero economic profit means normal profit. When economic profit is zero a firm is earning same as it would if it's resources were employed in the next best alternative. So the statement is false.

16) The 2008 financial crisis was the worst economic disaster since the great depression 1929. Three out of four busisness firm in US were organized as cooperation. The statement is true.

17) Limited liability of stockholders makes it easier for corporate to raise capital because new people can buy share and become shareholders easily and it raise the corporate capital quickly. So the statement is true.