question
A firm's profits are maximized when the marginal revenue (MR) equals which of the following?
A. TC
B. MC
C. ATR
D. ATC
A. TC
B. MC
C. ATR
D. ATC
answer
Marginal cost
question
The graph below represents a firm's costs in perfect competition. How much should they produce if the MR is $30?
answer
5
question
If, once again, MR is $30 in the graph below, what are the profits of the firm?
answer
0
question
If MR is $25 in the graph below and the firm is producing at a profit-maximizing quantity, what actions should be taken by the firm's owners?
answer
The firm should shut down in the long run, but remain open in the short run.
question
Which of the following describes the long-run?
answer
all costs are variable
question
When the market structure is one of perfect competition...
answer
Marginal revenue is equal to the price of the product.
question
What type of market structure is described in the the following table?
answer
Monopolistic Competition
question
The table below gives cost data for a certain firm. According to this data, if the firm produces 4 units of output, average fixed cost (AFC) equals...
answer
125
question
The situation where an increase in production leads to a decrease in average costs is known as...
answer
economics of scale
question
The graph below shows the effect on total revenue of different levels output. According to the graph, what is the price of the good being sold?
answer
100
question
The graph below illustrate the situation for a perfectly competitive firm. Based on this diagram, how many units of output should this firm produce in order to maximize the profit?
answer
4
question
Suppose the market price of apples is $0.80 per pound. An apple farmer decides to produce 500 pounds at an average total cost of $0.75 per pound. Which of the following is NOT true?
answer
TC is 350
question
Marginal cost (MC) is equal to...
answer
Change in TC/Change in Quantity
question
In the short run, the perfectly competitive firm maximizes profits by producing the quantity for which...
answer
Marginal revenue equals marginal cost.
question
In perfect competition, there are
answer
Many small firms selling a homogeneous product.
question
Which of the following is NOT a feature of perfect competition?
answer
. In the long run, firms always make positive profits
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