Answered: The marginal revenue received by a firm…

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

The marginal revenue received by a firm in a perfectly competitive market:

A) is greater than the market price.

B) is less than the market price.

C) is equal to its average revenue.

D) increases with the quantity of output sold.

E) decreases with the quantity of output sold.

Q.2 If price is currently between average variable cost and average total cost, then in the short run a perfectly competitive firm should:

A) shut down.

B) continue to produce to minimize losses.

C) raise price.

D) increase production to increase profit.

E) reduce production to increase profit.

Q.3 Lilly is the price-taking owner of an apple orchard. Currently the price of apples is high enough that Lilly is earning positive economic profits. In the long run, Lilly should expect:

A) lower apple prices due to entry of new firms.

B) higher apple prices due to exit of existing firms.

C) lower apple prices due to exit of existing firms.

D) higher apple prices due to entry of new firms.

E) no change in apple prices.

Q.4 A natural monopoly exists when:

A) a few firms collude to make one large firm.

B) economies of scale provide large cost advantages to having one firm produce the industry’s output.

C) firms naturally maximize profit regardless of market structure.

D) firms enter the industry as a result of profit incentives.

E) government creates a natural barrier to entry for other firms.

Q.5 Which of the following is an example of Monopoly Market:

A) Biman Airlines

B) Grameen Phone Network

C) Bangladesh Railway

D) Dell Inc

E) Agora Super Store

Q.6 Peter runs a local laundry service which is a perfectly competitive industry. In the short run, Peter will shut down his service rather than continue with it if:

A) the total revenues can’t cover the total fixed costs.

B) the total revenues can’t cover the total variable costs.

C) the total revenues can’t cover the total cost.

D) the price exceeds the average total cost.

E) losses are smaller than the total fixed costs.

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