### Economics Knowledge Check#### Question 1A firm can minimize its losses by shutting down when ______ are less than ______ costs.- a. variable costs; fixed- b. fixed costs; variable- c. revenues; variable- d. operating profits; sunk#### Question 2A firm in a perfectly competitive market has no control over price because:- a. the government imposes price ceilings on the products produced in perfectly competitive industries.- b. the market demand for products produced in perfectly competitive industries is perfectly elastic.- c. every firm's product is a perfect substitute for every other firm's product.- d. there is free entry and exit from the industry.#### Question 3A firm is experiencing ______ on the upward-sloping portion of a firm’s long run average cost curve.- a. increasing returns to scale- b. decreasing returns to scale- c. constant returns to scale- d. diminishing marginal returns#### Question 4A firm will ______ at the output where marginal cost increases.- a. begin to experience diminishing returns- b. become profitable- c. begin to experience increasing returns- d. start to experience losses

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Answered: A firm can minimize its losses by…

A firm can minimize its losses by shutting down when are less than costs. O a. variable costs; fixed O b. fixed costs; variable O c. revenues; variable O d. operating profits; sunk

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The optimal output rule for a perfectly competitive firm is to produce that quantity where A. P = MC in the long run, but in the short run to produce that quantity where MC = %3D ATC. O B. MC = ATC in the short run. C. P = MC no matter what the time period, provided that price is greater than average variable cost. D. P = MC no matter what the time period, provided that price is greater than %3D average total cost.
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2.Assume the following cost data are for a purely competitive producer: see table below: Total Average Product Fixed Cost I 2 3 4 5 6 7 8 9 10 $60.00 30.00 20.00 15.00 12.00 10.00 8.57 7.50 6.67 6.00 Average Variable Cost $45.00 42.50 40.00 37.50 37.00 37.50 38.57 40.63 43.33 46.50 Average Marginal Total Cost Cost $105.00 72.50 60.00 52.50 49.00 47.50 47.14 48.13 50.00 52.50 $45 40 35 30 35 40 45 55 65 75 a. At a product price of $66, will this firm produce in the short run? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? What economic profit or loss will the firm realize per unit of output. b. Answer the questions of 2a assuming product price is $46. Explain in detail. c. Answer the questions of 2a assuming product price is $38. Explain in detail. d. In the table below, complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3) e. Now assume that there are 1,500…
hould a competitive firm ever produce when it is losing money? Why or why not? D A. No, the firm should shutdown if it is making an accounting loss. O B. No, the firm should shutdown if it is making an economic loss. O C. Yes, as long as revenue can cover total variable costs plus any portion of fixed costs. O D. Yes, as long as revenue can cover some portion of total variable costs.
4.
profits. If P = MC and MC
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