In the short run, the firm should continue to produce if and only if a.Price exceeds average total cost. b.Price exceeds average fixed cost. c.Price exceeds average variable cost. d.Marginal revenue equals marginal cost. e.Price exceeds marginal cost

In the short run, the firm should continue to produce if and only if a.Price exceeds average total cost. b.Price exceeds average fixed cost. c.Price exceeds average variable cost. d.Marginal revenue equals marginal cost. e.Price exceeds marginal cost

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.7IP

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Question

In the short run, the firm should continue to produce if and only if

a.Price exceeds average total cost.

b.Price exceeds average fixed cost.

c.Price exceeds average variable cost.

d.Marginal revenue equals marginal cost.

e.Price exceeds marginal cost.

Definition Definition Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of output.

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A profit-maximizing firm in a competitive market is currently producing 500 units of output. It has average revenue of $10, average total cost of $8, and fixed costs of $200. a. What is its profit? b. What is its marginal cost? c. What is its average variable cost? d. Is the efficient scale of the firm more than, less than, or exactly 100 units?
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I. A company produces at an output level where marginal cost is equal to marginal revenue and has the following revenue and cost levels: Total revenue = $1,450 Total cost = $1,500 Total variable cost = $1,300 What would you suggest? a. Shut down. b. Continue to produce because the loss is less than the total fixed cost. c. Increase production to lower the marginal cost. e. Raise the price. II. At current long-run production levels, the marginal revenue of a competitive firm is $15 and the marginal cost of the firm is $15. If the market is perfectly competitive, the firm should a. cut back on production. b. stop production all together. c. produce more. d. continue producing at current levels.
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What did I do wrong?
Profits are maximized at the output at which marginal cost equals marginal revenue. If the market price falls below the minimum average variable cost: a. the firm should produce less. b. the firm should produce more. c. the firm should shut down. d. none of the above
I answered initially wrong and need help?
Cost MC Select one: ATC AVC ABC D Quantity C in the figure above represents the output level where the firm Quantity a. maximizes profits in the short-run. b. minimizes total costs in the short-run. C. maximizes profits in the long-run. d. minimizes marginal costs in the long-run. e. None of the above.
One more question is, A profit maximizing firm faces market price of p2. What are their profits?
Price MC ATC IC MR Quantity a. What area(s) of the graph represent(s) total revenue for this firm if it was profit maximizing? b. What area(s) of the graph represent(s) total cost for this firm if it was profit maximizing? c. What area(s) of the graph represent(s) profits for this firm if it was profit maximizing? d. What area(s) of the graph represent(s) deadweight loss if the firm was profit maximizing?
A competitive firm maximizes profit by choosing thequantity at whicha. average total cost is at its minimum.b. marginal cost equals the price.c. average total cost equals the price.d. marginal cost equals average total cost.
Marginal profit is negative when A. output exceeds the profit-maximizing level. B. total cost exceeds total revenue. C. marginal revenue is negative. D. profit is negative.