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
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31) If marginal revenue is less than marginal cost for a
a) decrease production
b) increase production
c) not change production
d) increase the price of its product
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- In the short run, a perfectly competitive firm's economic profits Question 7 options: must be negative, that is the firm must incur an economic loss. might be positive, negative (an economic loss), or zero (a normal profit). must be positive. must equal zero, that is, the firm earns a normal profit.A company in a perfectly competitive market produces an output level Q = 100 where marginal revenue is equal to marginal cost and has the following revenue and cost levels: Marginal cost curve intersects the average variable cost curve at $150. Marginal cost curve intersects the average total cost curve at $200. Marginal cost curve intersects the marginal revenue curve at $170. At Q = 100, ATC = $210 and AVC = $155 Is this firm making a profit or a loss at Q = 100? What would you suggest this firm should do in the short run? Explain.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
- For a perfectly competitive firm operating in the short run, in order to maximize profits it should produce output where: a. marginal cost equals average variable cost. b. marginal cost equals average total cost. c. total cost equals total revenue. d. marginal cost equals price.Graph represents the cost structure of an individual firm in a perfectly competitive market. If the price decreases to $25, find the profit maximizing output of firm A by explaining the profit maximizing condition for a perfectly competitive firm. Calculate total revenue, total cost, total variable cost and the profit of the firm at the profit maximizing output.40) A perfectly competitive firm will earn ________ economic profits in the range of output for which the firm's price is above its minimum average total cost. A) positive B) negative C) zero D) Any of the above answers could be correct. 41) If a perfectly competitive firm's average total cost curve is below its demand schedule at any level of output, then the firm will earn ________ profits. A) positive B) breakeven C) negative D) zero 42) A perfectly competitive firm ________ at the level of output where P = ATC. A) earns an economic profit B) suffers an economic loss C) breaks even D) shuts down 43) If P = MC and MC ATC, then a perfectly competitive firm will earn ________ profits. A) positive B) zero C) negative D) break-even 44) If a perfectly competitive firm is currently producing where P = MC and MC = ATC, then the firm will earn ________ profits. A) positive B) zero C) negative D) above normal 45) If…
- If a perfectly competitive firm sells 50 units of its product for $8 each and has an average cost of $2 a unit its marginal revenue is ____________ its total revenue is ___________ and its total cost is _______________.Question 8 Art’s Garage operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC=$20, AVC=$18, and price per unit is $10. Given this situation, in the short run, Art will shut down immediately. Art will shut down, but only after the lease on the garage expires. Art will sustain losses in the short run but will continue to operate. Art will break even.Assume the following total cost schedule for a perfectly competitive firm. Output TVC TFC 0 0 100 1 40 100 2 70 100 3 120 100 4 180 100 5 250 100 6 330 100 The total cost of producing 6 units of output is __________________ If the firm is producing at an output level of 2 units, the ATC is _____________ and the AVC is ______________ The profit-maximizing firm would shut down in the short run if the market price of its output dropped below ___________________ At what price would a profit-maximizing firm earn zero economic profits? _______________
- A perfectly competitive firm is in the following situation: output = 6000 units; market price = $2; total fixed cost = $7000; total variable cost = $6000; marginal cost =$3. This firm should do which of the following: reduce output but not shut down to maximize short-run profit. increase output to maximize profit. not change output since profit is already maximized. shut down immediately. raise price above $3 to maximize profits.39. A perfectly competitive firm maximizes its profit by producing the level of output so that its average total cost equals the market price. True False21.The cost curves for an individual firm are given in the figure. In Figure (A), highlight the firm’s short-run supply curve. In Figure (B), highlight the firm’s long-run supply curve.
