A perfectly competitive firm maximizes profit by producing 100 units at an ave total cost of $12 and an average fix cost of $5 for a market price of $10. Its shutdown price will be - O a. $10 O b. $5 O c. $7 O d. $12

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
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Chapter10: Prices, Output, And Strategy: Pure And Monopolistic Competition
Section: Chapter Questions
Problem 6E
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A perfectly competitive firm maximizes profit by producing 100 units at an ave
total cost of $12 and an average fix cost of $5 for a market price of $10. Its
shutdown price will be -
$10
O b. $5
$7
O d. $12
Show Transcribed Text
Under perfectly competitive conditions, a firm should continue to produce -
OaUntil total revenue is as high as possible
Ob Until price is equal to marginal cost
Oc Until profits are negative
Od. While costs are falling, then stop
Oe. Until there is no more revenue
Show Transcribed Text
A perfectly competitive firm maximizes profit by producing 200 units at an average
total cost of $15 and an average fix cost of $5 for a market price of $25. Its total
fixed cost will be-
O a $3000
O b. $1000
O c.
$1500
Od. $2000
Show Transcribed Text
According to this principle, as successive units of a variable factor (say labor) are
added to a fixed factor, beyond some point the marginal product attributed to
every additional unit of that variable factor will decline.
O a. None of the above
O b. Law of diminishing returns
Oc. Principle of profit maximization
O d. Law of variable productivity
e. Principle of economies of scale
Transcribed Image Text:A perfectly competitive firm maximizes profit by producing 100 units at an ave total cost of $12 and an average fix cost of $5 for a market price of $10. Its shutdown price will be - $10 O b. $5 $7 O d. $12 Show Transcribed Text Under perfectly competitive conditions, a firm should continue to produce - OaUntil total revenue is as high as possible Ob Until price is equal to marginal cost Oc Until profits are negative Od. While costs are falling, then stop Oe. Until there is no more revenue Show Transcribed Text A perfectly competitive firm maximizes profit by producing 200 units at an average total cost of $15 and an average fix cost of $5 for a market price of $25. Its total fixed cost will be- O a $3000 O b. $1000 O c. $1500 Od. $2000 Show Transcribed Text According to this principle, as successive units of a variable factor (say labor) are added to a fixed factor, beyond some point the marginal product attributed to every additional unit of that variable factor will decline. O a. None of the above O b. Law of diminishing returns Oc. Principle of profit maximization O d. Law of variable productivity e. Principle of economies of scale
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