Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 13.1, Problem 2QQ
To determine
Average cost of the firm.
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1. Price exceeds MC in: a. graph (a) only. b. graph (b) only. c. graphs (a) and (b) only. d. graphs (a), (b), and (c). 2. Price exceeds ATC in: a. graph (a) only. b. graph (b) only. c. graphs (a) and (b) only. d. graphs (a), (b), and (c). 3. The firm represented by Figure 13.1c is: a. making a normal profit. b. incurring a loss. c. producing at the same level of output as a purely competitive firm. d. producing a standardized product. 4. Which of the following pairs are both “competition-like elements” in monopolistic competition? a. Price exceeds MR; standardized product. b. Entry is relatively easy; only a normal profit in the long run. c. Price equals MC at the profit-maximizing output; economic profits are likely in the long run. d. A firm’s demand curve is downsloping; differentiated products.
2. The relationship between price and demand per month for a consumer product is
p = 3500 -1.1D5
where p is the price per unit in dollars and D is the demand in units. The fixed cost is $300 per
month and the variable cost is $4.00 per unit.
What is the optimal number of units that should be produced and sold per month?
a.
b. What is the maximum profit per month?
PRICE
(dollars per unit)
2
QUANTITY
PRICE OR COST
(dollars per unit)
QUANTITY
MC
ATC
AVC
MR
Question 40
If the firm in the figure above raised the price of its product abvove $4, the firm would:
a. increase its profits
b. reduce its total revenue to zero
c. increase its total revenue but not its profits because costs would increase.
d. not affect revenues at all but profits would increase because costs decrease
e. none of the above
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