If a perfectly competitive firm is producing at point A, in the graph, which of the following is true? OA. The firm earns zero accounting profit. B. The firm earns positive economic profit. OC. The firm suffers a loss. O D. The firm earns zero economic profit.
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- Based on the above graph, which statement better explains the slope of the total revenue? $ costs O 0 TC TR web page designs a) The slope of the total revenue curve is revealed by the cost of the product produced. b) Both a and b above can be used to explain the slope of the total revenue curve. c) As output rises, decreasing returns will cause total costs to sharply decelerate. d) A perfectly competitive business is indicated by total revenue displayed as a straight-line sloping upward.Which of the following is always true for the profit-maximizing firm in a perfectly competitive output market (as discussed in Chapter 8): O a. The economic profit at the profit maximizing output is negative. O b. The profit maximizing output is equal to the price given by the market. Oc. The economic profit at the profit maximizing output is positive. O d. At profit maximizing output, the slope of the total cost curve is equal to the slope of the total revenue curve. Say you have following Engle curve (which are the dashed lines) relating household income and pollution: FIGURE 1.-POLLUTION EMBODIED IN HOUSEHOLD CONSUMPTION: PM10 O 1984 2012 10 15 Average After-Tax Income (10,000 2002 $) Which of the following statements about this Engle curve is true in 2012? Select one: O a. Household pollution is a Giffen good. O b. Household pollution is a normal good. O c. Househald pollution is an inferior good. O d. Household pollution starts as an inferior good, and then becomes a normal good.…Suppose a perfectly competitive firm's produces 80 units at a minimum average variable cost of $2.5. If the price is $3 and the firm's marginal cost is $3, the firm should? Select one: O a continue to produce 80 O b. continue to operate, but produce more than 80 O c. shut down O d. continue to produce, but produce less than 80
- You learn that a firm's average total costs (ATC) and average variable costs (AVC) are exactly equal. What does that mean? O Marginal cost is zero O ATC and AVC must be equal to zero O Average fixed costs (AFC) are zero O Economic profit is positive O Economic profit is negativeIf You are the owner and only employee of a company that writes computer software that is used by gamblers to collect sports data. Last year you earned a total revenue of $90,000. Your costs for equipment, rent, and supplies were $60,000. To start this business you invested an amount of your own capital that could pay you a return of $40,000 a year. then your economic profit is Select one: a. 10,000 O b.-10,000 O c. -40,000 O d. 20,000 O e. 40,000Which describes the firms supply curve for the short run with perfect competition? O The section of MC that is above AVC O The section of MC that is above ATC There is no supply curve since it depends on the slope of demand O The section of ATC to the right of its intersection with MC Which describes the long run equilibrium situation for a firm in perfect competition? O Demand is sloping downward and tangent to ATC Demand is horizontal and tangent to the bottom of ATC O Demand is tangent to AVC O There are positive economic profits to motivate firms to keep producing
- Consider the following data facing a perfectly competitive firm: price = $20, quantity of output produced = 600 units, average total cost = $16, average fixed cost = $12, and marginal cost = $22. This firm should O a. increase output to maximize profit. O b. not change output in the short run since profit is already maximized. O c. shut down immediately. O d. reduce output but not shut down in the short run to maximize profit. O e. raise price above $20 to maximize profit in the short run.Do firms in a perfectly competitive market exhibit productive efficiency? O Productive efficiency, the economizing of society's scarce resources, is guaranteed for a perfectly competitive firm in the long run as well as in the short run. Productive efficiency, when P=Minimum ATC, is guaranteed in the long run. It is possible that a firm will produce its output at a unit cost higher than the lowest unit cost possible in the short run. Perfectly competitive firms will realize productive efficiency, the point where P=MC, in the long run but not in the short run. Perfectly competitive firms will never reach productive efficiency in the long run or the short run. It is too easy for firms to enter and exit the marketplace for this condition ever to be realized.In perfect competition, what is the relationship between the demand for the firm's output and the market demand? In a perfectly competitive market, the market demand is O A. perfectly elastic; perfectly elastic O B. shown by a downward-sloping curve; perfectly elastic O C. shown by a downward-sloping curve; shown by a downward-sloping curve O D. perfectly elastic; shown by a downward-sloping curve and the demand faced by the individual firm is C
- Conceptually, in the long run, which of the following statements is true about profit-maximizing firms in a perfectly competitive market structure? O a. Economic profit can be positive or negative. O b. Economic profits are positive. O c. Economic profits are zero. O d. Economic profits are negative.hould a competitive firm ever produce when it is losing money? Why or why not? D A. No, the firm should shutdown if it is making an accounting loss. O B. No, the firm should shutdown if it is making an economic loss. O C. Yes, as long as revenue can cover total variable costs plus any portion of fixed costs. O D. Yes, as long as revenue can cover some portion of total variable costs.A perfectly competitive firm is breaking even. In the short run it should In the long run it should O a. shut down; expand O b. produce where MC = MR; leave the industry Oc produce where MC = MR; keep the same production level O d. shut down: exit the industry Corn is produced in a perfectly competitive market. The demand for ethanol decreases. This will cause the individual corn farmer's marginal revenue to maximizing level of output to and their profit- Oa. decrease; increase Ob. increase; increase O c. increase: decrease O d. decrease; decrease
