Suppose a perfectly competitive firm is incurring an economic loss. Consequently, the i) firm's average total cost exceeds the price. ii) firm's economic loss equals its total fixed cost. iii) firm cannot maximize profit. O A. i only. O B. i only. OC. i, ii, and ii. O D. i and ii only. O E. ii and iii.
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- 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. FalseSuppose a firm operating in a competitive market has the following cost curves: a. $9 b. $50 PRICE c. $30 O d. $15 20 18 16 14 10 878 6 st 4 2 12 MC Refer to Figure 14-2. If the market price is $10, what is the firm's short-run economic profit? ATC 3 4 5 6 7 8 9 10 QUANTITY
- The diagram below shows the short - run cost curves for 3 perfectly competitive firms in the same industry. Firrm A Firm B Firm C ATC MC ATC MC MC ATC p. Qc Output Output Output FIGURE 9- 6 Refer to Figure 9 - 6. Which of the following statements about Firms A, B and C is true? A. Firms A, B and C are earning profits. O B. Firms A, B and C are breaking even. O C. Firm A is suffering losses, Firm B is breaking even, and Firm C is earning profits. OD. Firm A is breaking even, Firm B is suffering losses, and Firm C is earning profits. E. Firm A is earning profits, Firm B is breaking even, and Firm C is suffering losses. O O O O OQUESTION 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 followWhat is a price taker? A price taker is O A. a firm with a downward-sloping demand curve. O B. a firm that is unable to affect the market price. Oc. a firm with a perfectly inelastic demand curve. O D. a firm that has the ability to charge price greater than marginal cost. O E. a firm that does not seek to maximize profits. When are firms likely to be price takers? A firm is likely to be a price taker when O A. it sells a differentiated product. O B. barriers to entry are substantial. OC. it has market power. O D. it represents a small fraction of the total market,. O E. firms in the industry collude.
- Which of the following best explains why a firm in a competitive price-taker market must take the price determined in the market? The short-run average total costs of firms that are price takers will be constant. O If a price taker increased its price, consumers would buy from other suppliers. O Firms in a price-taker market will have to advertise in order to increase sales. There are no good substitutes for the product supplied by a firm that is a price taker.A perfectly competitive firm that makes car batteries has total fixed costs of $10,000 per month. The market price at which it can sell its output is $100 per battery. The firm's minimum AVC Is $105 per battery. The firm is currently producing 500 batteries a month (the output level at which MR=MC). This firm is making a O loss, shut down O profit, shut down O profit: increase O loss; increase and should. productionSuppose a perfectly competitive firm's total cost of production (TC) is TC(q) q-4q60q + 15 and the firm's marginal cost of production (MC) is MC(q) 3q-8q+ 60 The firm's short-run supply curve is given by O A. P 3q-8q+60 for prices above $4. O B. P =q-4q+60+ 15 O C. P 3q-8q+ 60 for prices above $56 O D. p q-4q+ 60 for prices above $56 O E. P q-4q+ 60 for prices above $1
- 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.Suppose a perfectly competitive firm is experiencing short run economic losses. The firm will remain in the industry as long as a) marginal revenue equal to marginal cost b) price is greater than its minimum average variable cost O c) total revenue and total cost d) total revenue and average total costIf 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.