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A:
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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.If a firm is a price-taker, then Select one: O a. marginal revenue is equal to price O b. the firm can sell as much output as it likes at the market-determined price O c. marginal revenue is equal to total revenue O d. both a and bWith free entry and exit, the long-run market supply in a perfectly competitive market is O a. upward sloping. O b. horizontal and equal to the minimum long-run marginal cost of each firm producing in this market. Oc. horizontal and equal to the minimum long-run average cost of each firm producing in this market. O d. downward sloping.
- Which of the following is always true for the profit-maximizing firm in a perfectly competitive output market (as discussed in Chapter 8): O a. The economic profit at the profit maximizing output is negative. O b. The profit maximizing output is equal to the price given by the market. Oc. The economic profit at the profit maximizing output is positive. O d. At profit maximizing output, the slope of the total cost curve is equal to the slope of the total revenue curve. Say you have following Engle curve (which are the dashed lines) relating household income and pollution: FIGURE 1.-POLLUTION EMBODIED IN HOUSEHOLD CONSUMPTION: PM10 O 1984 2012 10 15 Average After-Tax Income (10,000 2002 $) Which of the following statements about this Engle curve is true in 2012? Select one: O a. Household pollution is a Giffen good. O b. Household pollution is a normal good. O c. Househald pollution is an inferior good. O d. Household pollution starts as an inferior good, and then becomes a normal good.…Because perfectly competitive firms are price takers, a permanent increase in the market demand does not change the price of the product in either the short run or long run. O A. True O B. FalseQUESTION 22 What happens if a single firm in a perfectly competitive market raises its price above that charged by other firms? O a. It loses market share O b. Nothing happens because it has loyal customers O c. It goes out of business O d. It makes supernormal profit until other firms follow
- 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.QUESTION 24 The total revenue of a purely competitive firm from selling 6 units of output is $48. Based on this information, the unit price of the output must be O $54. O $8. O $42. O $288.profits. If P = MC and MCChoose the statement about a perfectly competitive market that is correct. O A. The market supply curve is the vertical sum of all of the individual supply curves in the market. O B. The market supply curve is upward sloping at prices above the shutdown price. OC. Each firm takes the market price as given and produces as much as possible. O D. The market demand curve is horizontal at the market price.Suppose that marginal revenue for a perfectly competitive firm is $20. When the firm produces 10 units, its marginal cost is $20, its average total cost is $22, and its average variable cost is $17. Then to maximize its profit in the short run, the firm A) should stay open and incur an economic loss of $20. B) must decrease its output to increase its profit. C) must increase its output to increase its profit. O D) should not change its production because it is already maximizing its profit and is making an economic profit. E) should shut down.If a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the and the vertical axis will represent OA. price, measured in dollars; quantity of goods produced O B. total costs measured in dollars; quantity of goods produced O C. quantity produced; both total revenue and total costs, measured in dollars. O D. quantity produced; total revenue and total variable costs, measured in dollars.SEE MORE QUESTIONS