8. In the short run, a perfectly competitive firm earning negative economic profit is a. on the downward-sloping portion of its ATC curve. b. at the minimum of its ATC curve. C. on the upward-sloping portion of its ATC curve. d. above its ATC curve.

If a profit-maximizing, competitive firm is producinga quantity at which marginal cost is between averagevariable cost and average total cost, it willa. keep producing in the short run but exit themarket in the long run.b. shut down in the short run but return toproduction in the long run.c. shut down in the short run and exit the market inthe long run.d. keep producing both in the short run and in thelong run.

24. The figure to the right illustrates the cost curves of a perfectly competitive firm. If the market price is P1 Price and cost (dollars per pound) ATC AVC 0 D-MR 0₁ 02 03 A. The firm will experience a loss since price is less than ATC. B. The firm will break even by producing a quantity of Q2. C. The firm may make a profit if it can increase the demand for its product. D. The firm will experience a loss and raise its price to P2. The firm will then break even. Quantity (thousands of pounds) 1

3. The graph on the right shows the short-run cost curves and three possible marginal revenue curves for a perfectly competitive firm. If the firm were facing MR₁, then we know that this firm should OA. keep producing, even though it is incurring a loss it is less than the fixed costs that must be paid if it shuts down. OB. keep producing, since it is making a profit at the profit-maximizing output. OC. shut down, since it is incurring a loss that is greater than the fixed costs that must be paid if it shuts down. OD. shut down, since it is incurring a loss and when a firm earns less than zero profit, it should shut down. If the firm were facing MR₂, then we know that this firm should OA shut down, since it is incurring a loss and when a firm ears less than zero profit, it should shut down. OB. keep producing, even though it is incurring a loss it is less than the fixed costs that must be paid if it shuts down. OC. keep producing, since it is making a profit at the profit-maximizing…

Pretzel stands in New York City are a perfectly competitive industry in long-runequilibrium. One day, the city starts imposing a $100 per month tax on each stand.How does this policy affect the number of pretzels consumed in the short run and thelong run?a. down in the short run, no change in the long runb. up in the short run, no change in the long runc. no change in the short run, down in the long rund. no change in the short run, up in the long run

Question 3: Cost Table Question Complete the following short-run cost table for a perfectly competitive firm using the information provided TFC TVC TC AFC AVC ATC MC 1 $24 $24 $20 -- $120 $112 -- a. Fill in the table above b. Should this firm produce, why or why not c. If market price for this product is $32, how much is the profit maximizing level of output. d. At that level, how much is the profit, or loss, or breakeven e. How much is marginal revenue f. Draw the graphs to show part d, with the MR, MC, D, ATC and AVC graphs for this market 234

When a perfectly competitive firm increases thequantity it produces and sells by 10 percent, itsmarginal revenue _________ and its total revenuerises by _________.a. falls; less than 10 percentb. falls; exactly 10 percentc. stays the same; less than 10 percentd. stays the same; exactly 10 percent

a. Calculate profit for each quantity. How much should the firm produce to maximize profut ? b. Calculate marginal revenue and marginal cost for each quantity. Graph  them. (Hint: Put the points between whole numbers. For example, the  marginal cost between 2 and 3 should be graphed at ) At what quantity do these curves cross? How does this relate to your answer to part (a)? c. Can you tell whether this firm is in a competitive industry? If so, can you  tell whether the industry is in a long-run equilibrium?

11. The competitive firm should shut down if the price level falls below the OMC = MR Onone of the answers is correct AVC O ATC PARDUO Jan S AFC FOR M

28. The shutdown point for a perfectly competitive firm is the  Select one: a. Lowest point on the marginal cost curve. b. Lowest point on the AVC curve.  c. Lowest point on the ATC curve. d. Point at which a firm’s long-run supply curve ends.