Question 5.5. T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2 each. At this level of output, the average total cost is $2.50 and the average variable cost is $2.20. Based on these data, the firm should shut down in the short run. decrease output to 2,500 units. ontinue to produce 3,000 units. increase output to 3,500 units. Question 6.6. A firm should increase the quantity of output as long as its marginal revenue is greater than its marginal cost. marginal cost is greater than its marginal revenue. average revenue is greater than its average total cost. average revenue is greater than its average variable cost. Question 7.7. In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is equal to the price. less than the price. greater than the price. equal to the average cost. Question 8.8. The classic example of a private, unregulated monopoly is Xerox. De Beers. General Motors. General Electric. Question 9.9. Natural monopolies result from patents and copyrights. pricing strategies. extensive economies of scale in production. control over an essential natural resource.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 5.5. T-Shirt Enterprises is selling in a purely competitive market. It is producing 3,000 units, selling them for $2 each. At this level of output, the average total cost is $2.50 and the average variable cost is $2.20. Based on these data, the firm should

shut down in the short run.

decrease output to 2,500 units.

ontinue to produce 3,000 units.

increase output to 3,500 units.

Question 6.6. A firm should increase the quantity of output as long as its

marginal revenue is greater than its marginal cost.

marginal cost is greater than its marginal revenue.

average revenue is greater than its average total cost.

average revenue is greater than its average variable cost.

Question 7.7. In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is

equal to the price.

less than the price.

greater than the price.

equal to the average cost.

Question 8.8. The classic example of a private, unregulated monopoly is

Xerox.

De Beers.

General Motors.

General Electric.

Question 9.9. Natural monopolies result from

patents and copyrights.

pricing strategies.

extensive economies of scale in production.

control over an essential natural resource.

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