FPC1 Competency 10

For a syrup producer in central Vermont, profit is maximized at the level of output for which total
A) revenue exceeds total cost by the largest amount.
B) revenue exceeds total cost by the smallest amount.
C) revenue is maximized.
D) cost is minimized.
E) revenue equals total cost.

Marginal revenue is
A) the change in total revenue from a one-unit increase in the quantity sold.
B) another name for total revenue.
C) the change in total cost from producing an additional unit of output.
D) the economic profit from producing an additional unit of output.
E) less than price for a perfectly competitive firm.

A firm maximizes its profit by producing the amount of output such that
A) marginal revenue equals marginal cost.
B) marginal revenue exceeds marginal cost by some amount.
C) marginal revenue is maximized.
D) marginal cost is minimized.
E) marginal revenue exceeds marginal cost by the maximum amount possible.

The long-run average cost curve is U-shaped because of which of the following?
A) decreasing marginal returns as more labor is hired
B) constant fixed costs as output is increased
C) economies and diseconomies of scale
D) increasing marginal returns as more labor is hired
E) decreasing average fixed costs as output is increased

A perfectly competitive firm maximizes its profit by producing at the point where
A) total revenue equals total cost.
B) marginal revenue is equal to marginal cost.
C) total revenue is equal to marginal revenue.
D) total cost is at its minimum.
E) total revenue is at its maximum.

If it does not shut down, a perfectly competitive firm produces where marginal cost is equal to the marginal revenue
A) only in the short run.
B) only in the long run.
C) always to maximize its profit.
D) only if it is not possible to produce where price equals average variable cost.
E) only if it is not possible to produce where price is greater than average total cost.

The above figure illustrates a perfectly competitive firm. If the market price is $40 a unit, to maximize its profit (or minimize its loss) the firm should
A) shut down.
B) produce more than 10 and less than 30 units.
C) produce 30 units.
D) produce more than 30 units and less than 40 units..
E) produce 40 units.

The above figure illustrates a perfectly competitive firm. If the market price is $10 a unit, to maximize its profit (or minimize its loss) the firm should
A) shut down.
B) produce between 10 and less than 30 units.
C) produce 30 units.
D) produce more than 30 units and less than 40 units.
E) produce 40 units.

Which of the following statements will NOT be true for the perfectly competitive firm in the long-run? (Choose 2)
A) The firm will produce the quantity where Marginal Cost is equal to Marginal Revenue.
B)The firm's average costs will be at their minimum level.
C) The firm's average fixed costs are declining.
D)The firm makes zero economic profit.
E) The firm's marginal costs exceed their average costs and the profit maximizing level of output.