1. A firm will shut down in the short run when (check all that apply) a. price is less than average fixed cost b. losses (negative of profits) are greater than fixed costs c. total revenue is less than variable cost d. total revenue is less than total cost e. price is less than average variable cost f. total revenue is less than fixed cost

1. A firm will shut down in the short run when (check all that apply) a. price is less than average fixed cost b. losses (negative of profits) are greater than fixed costs c. total revenue is less than variable cost d. total revenue is less than total cost e. price is less than average variable cost f. total revenue is less than fixed cost

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter8: Perfect Competition

Section: Chapter Questions

Problem 3.6P

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4.Average variable cost is found by dividing.............. a. variable cost by output b. output by variable cost c. marginal cost by output d. output by marginal cost 5. A profit maximizing firm will increase production a. price is less than marginal cost b. price equals marginal cost c. price exceeds marginal revenue d. price exceeds marginal cost 6. Which statement is true? a. Accounting profits are greater than economic profits. b. Economic profits are greater than accounting profits. c. Accounting profits are equal to economic profits...
9. a corn farmer will tend to expand his output as long as the price of corn exceeds aversge variabke cost and: a) marginal cost is smaller than the market price b) marginal revenue is larger than the market price of corn c) marginal revenue is positive d) marginal revenue is kess than the market price of corn
7 What is the total variable cost? 8 Identify the firm's short-run supply curve. 9 Is the industry in a long-run equilibrium?
a. A firm operating in a perfectly competitive market is earning K20 million economic profits. What is the firms accounting profits if the opportunity cost is K30 millionb. What will be the firm’s economic profits in the long run? c. Company ‘A’ has been recording accounting profits averaging K50 million by investing in project C. It could earn K60 million and K70 million in projects D and E, respectively. What is the company’s current economic profit? d. Advise management what to do in the long run e. Project ‘B’ has a net present value of zero after applying a discount rate of 10%, which is the risk adjusted required rate of return that takes into account the riskiness of the project. What return is earned on this project f. After a risk assessment, it is discovered that project ‘B’ has become more risky and the risk adjusted required return to use must be 12%. Will the net present value of project ‘B’ still remain zero?
26) The short run supply curve of a firm is a) marginal cost curve b) average total cost curve c) average variable cost curve d) marginal revenue curve
only typed answer Assume a competitive firm faces a market price of $120, a cost curve of: C = 13q3 + 20q + 500, and a marginal cost of: MC = q2 +20. What is the firm's profit maximizing output level? ?? Units (round your answer to two decimal places) What is the firm's profit maximizing price? ??? (round to the nearest penny) What is the firm's profit? ??? (round to the nearest npenny) In the short-run, this firm should ?? produce or shut down??
4. Which formula represents the profits for a firm? (check all that apply) (AC=average cost, MC=marginal cost, AVC=average variable cost, P=price, Q=output, TC=total cost) a. PQ-TC b. PQ-AC c. Q(P-AC) d. P(Q-AC) e. Q(P-MC) f. P(Q-AVC)
5. (a) What do we mean by “price taker”? Explain why a firm in perfect competition is a price taker.How is this price determined? Explain. (b) “The demand curve for a perfectly competitive firm ishorizontal and it is also the firm’s marginal revenue curve.” Explain.
31) If marginal revenue is less than marginal cost for a perfectly competitive firm , it should a) decrease production b) increase production c) not change production d) increase the price of its product
1. Draw the short run marginal cost curve for a firm with eventually diminishing marginal product. Then, indicate the price at which a firm is indifferent between shutdown and exit and the price at which a firm is indifferent between entry and exit
1. Which of the following represents the firm's short-run condition for shutting down? a. shut down if TR < TC b. shut down if TR < FC c. shut down if P < ATC d. shut down if TR < VC
8- A business is below the economic break-even point and above the operational break-even point. Therefore, it can be said that: *a) gives operating and economic profitb) gives economic profit and operating lossc) gives operating profit and economic lossd) causes economic and operational loss