In the short run, fixed costs for a profitable firm are:
A)
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B)
negative.
C)
important determinants of the output level.
D)
irrelevant in determining the optimal level of output.
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16.
A firm should increase the quantity of output as long as its:
A)
marginal revenue is greater than its marginal cost.
B)
marginal cost is greater than its marginal revenue.
C)
average revenue is greater than its average total cost.
D)
average revenue is greater than its average variable cost.
?
17.
A perfectly competitive seller should produce (rather than shut down) in the short run:
A)
only if total revenue exceeds total cost.
B)
only if total cost exceeds total revenue.
C)
if total revenue exceeds total cost or if total cost exceeds total revenue by some amount less than total fixed cost.
D)
if total cost exceeds total revenue by some amount greater than total fixed cost.
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18.
Assume the price of a product sold by a perfectly competitive firm is $5. Given the data in the accompanying table, at what output is total profit highest in the short run?
A)
20
B)
30
C)
40
D)
50
?
19.
The Campus Crustacean Company receives $2 per box for its crawfish and is selling 1,600 boxes to maximize its profits. What is the per unit profit on a box of crawfish at the profit-maximizing level of output if the variable cost is $1 per box and fixed costs are $1,200?
A)
$.25.
B)
$.50.
C)
$1.00.
D)
$1.25.
?
20.
If a perfectly competitive firm is producing at some level less than the profit-maximizing output, then:
A)
price is necessarily greater than average total cost.
B)
fixed costs are large relative to variable costs.
C)
price exceeds marginal revenue.
D)
marginal revenue exceeds marginal cost.
?
21.
If a perfectly competitive firm is producing at the P = MC output and realizing an economic profit, at that output:
A)
marginal revenue is less than price.
B)
marginal revenue exceeds ATC.
C)
ATC is being minimized.
D)
total revenue equals total cost.
?
22.
If a perfectly competitive firm shut down in the short run:
A)
its loss will be zero.
B)
it will realize a loss equal to its total variable costs.
C)
it will realize a loss equal to its total fixed costs.
D)
it will realize a loss equal to its total costs.
?
23.
In the short run a perfectly competitive seller will shut down if:
A)
it cannot produce at an economic profit.
B)
price is less than average variable cost at all outputs.
C)
price is less than average fixed cost at all outputs.
D)
there is no point at which marginal revenue and marginal cost are equal.
?
24.
If at the MC = MR output, AVC exceeds price:
A)
new firms will enter this industry.
B)
the firm should produce the MC = MR output and realize an economic profit.
C)
the firm should shut down in the short run.
D)
the firm should expand its plant.
?
25.
In the short run a perfectly competitive seller will close down if product price:
A)
equals average revenue.
B)
is greater than MC.
C)
is less than AVC.
D)
is less than ATC.
?
26.
A firm sells a product in a perfectly competitive market. The marginal cost of the product at the current output of 200 units is $4.00. The minimum possible average variable cost is $3.50. The market price of the product is $3.00. To maximize profit or minimize losses, the firm should:
A)
continue to produce 500 units.
B)
produce less than 500 units.
C)
produce more than 500 units.
D)
shut down.
?
27.
The short-run supply curve for a competitive firm is the:
A)
entire MC curve.
B)
segment of the MC curve lying below the AVC curve.
C)
segment of the MC curve lying above the AVC curve.
D)
segment of the AVC curve lying to the right of the MC curve.
?
28.
This pure competitive firm in the graph will not produce unless price equals at least:
A)
$2.
B)
$5.
C)
$7.
D)
$10.
?
29.
Which point is definitely not on a competitive firm’s short-run supply curve?
A)
A
B)
B
C)
C
D)
D
?
Use the following to answer questions 30-33:
It shows cost data for a firm that is selling in a perfectly competitive market.
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30.
Refer to the table above. If the market price for the firm’s product is $50, the competitive firm will:
A)
produce 1 unit.
B)
produce 2 units.
C)
produce 3 units.
D)
shut down.
?
31.
Refer to the table above. If the market price for the firm’s product is $70, the competitive firm will:
A)
produce 1 unit.
B)
produce 2 units.
C)
produce 3 units.
D)
shut down.
?
32.
Refer to the table above. If the product price is $290, the per-unit economic profit at the profit-maximizing output is:
A)
$33.
B)
$76.
C)
$119.
D)
$152.
?
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