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Table 12-1 Table 12-1 Table 12-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units. -Refer to Table 12-1.What is the fixed cost of production? A) $0 B) $500 C) $1,000 D) It cannot be determined. Table 12-1 shows the short-run cost data of a perfectly competitive firm that produces plastic camera cases. Assume that output can only be increased in batches of 100 units. -Refer to Table 12-1.What is the fixed cost of production?


A) $0
B) $500
C) $1,000
D) It cannot be determined.

E) A) and D)
F) B) and D)

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Figure 12-9 Figure 12-9 -Refer to Figure 12-9.Suppose the prevailing price is P<sub>1</sub> and the firm is currently producing its loss-minimizing quantity.If the firm represented in the diagram continues to stay in business,in the long-run equilibrium, A) it will reduce its output to Q<sub>0</sub> and face a price of P<sub>0</sub>. B) it will continue to produce Q<sub>1</sub> but faces the higher price of P<sub>2</sub>. C) it will expand its output to Q<sub>2</sub> and face a price of P<sub>2</sub>. D) it will expand its output to Q<sub>3</sub> and face a price of P<sub>1</sub>. -Refer to Figure 12-9.Suppose the prevailing price is P1 and the firm is currently producing its loss-minimizing quantity.If the firm represented in the diagram continues to stay in business,in the long-run equilibrium,


A) it will reduce its output to Q0 and face a price of P0.
B) it will continue to produce Q1 but faces the higher price of P2.
C) it will expand its output to Q2 and face a price of P2.
D) it will expand its output to Q3 and face a price of P1.

E) None of the above
F) B) and D)

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Figure 12-7 Figure 12-7 -Refer to Figure 12-7.Suppose the prevailing price is $20 and the firm is currently producing 1,350 units.In the long-run equilibrium,the firm represented in the diagram A) will continue to produce the same quantity. B) will reduce its output to 1,100 units. C) will reduce its output to 750 units. D) will cease to exist. -Refer to Figure 12-7.Suppose the prevailing price is $20 and the firm is currently producing 1,350 units.In the long-run equilibrium,the firm represented in the diagram


A) will continue to produce the same quantity.
B) will reduce its output to 1,100 units.
C) will reduce its output to 750 units.
D) will cease to exist.

E) A) and D)
F) A) and C)

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Assume that after a banner year in U.S.farm exports in 2011,farmers are expected to break even in 2012.This means that at the quantity being produced in 2012,


A) MC =AVC.
B) MR =MC.
C) MR =ATC.
D) AVC =ATC.

E) None of the above
F) All of the above

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In long-run perfectly competitive equilibrium,which of the following is false?


A) There is efficient, low-cost production at the minimum efficient scale.
B) Economic surplus is maximized.
C) Firms earn economic profit.
D) Economies of scale are exhausted.

E) A) and C)
F) All of the above

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Without government subsidization,the conversion of farmland in the United Kingdom from conventional to organic production will generally cause a farmer's


A) marginal cost and average total cost to decrease.
B) marginal cost and average total cost to increase.
C) average total cost to increase and marginal cost to decrease.
D) marginal cost to increase and average total cost to remain unchanged.

E) A) and D)
F) A) and B)

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Figure 12-4 Figure 12-4 Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 12-4.If the market price is $30 and the firm is producing output,what is the amount of the firm's profit or loss? A) loss of $1,080 B) profit of $1,440 C) loss of $2,520 D) profit of $1,300 Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market. -Refer to Figure 12-4.If the market price is $30 and the firm is producing output,what is the amount of the firm's profit or loss?


A) loss of $1,080
B) profit of $1,440
C) loss of $2,520
D) profit of $1,300

E) A) and C)
F) All of the above

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Use a graph to show the demand,AVC,ATC,MC,and MR curves of a firm that should temporarily shut down in the short run.Identify the shutdown point on the graph.

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Max Shreck,an accountant,quit his $80,000-a-year job and bought an existing tattoo parlor from its previous owner,Sylvia Sidney.The lease has five years remaining and requires a monthly payment of $4,000.Max's explicit cost amounts to $3,000 per month more than his revenue.Should Max continue operating his business?


A) Max's explicit cost exceeds his total revenue. He should shut down his tattoo parlor.
B) Max should continue to run the tattoo parlor until his lease runs out.
C) If Max's marginal revenue is greater than or equal to his marginal cost, then he should stay in business.
D) This cannot be determined without information on his revenue.

E) All of the above
F) None of the above

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Figure 12-6 Figure 12-6 Figure 12-6 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. -Refer to Figure 12-6.At price P<sub>1</sub>,the firm would produce A) Q<sub>1</sub> units B) Q<sub>3</sub> units. C) Q<sub>5</sub> units. D) zero units. Figure 12-6 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm. -Refer to Figure 12-6.At price P1,the firm would produce


A) Q1 units
B) Q3 units.
C) Q5 units.
D) zero units.

E) B) and D)
F) C) and D)

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If the market price is $25 in a perfectly competitive market,the marginal revenue from selling the fifth unit is


A) $5.
B) $12.50.
C) $25.
D) $125.

E) C) and D)
F) None of the above

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Which of the following statements is correct?


A) Economic profit takes into account all costs involved in producing a product.
B) Accounting profit is not relevant in preparing the firm's financial statement.
C) Economic profit always exceeds accounting profit.
D) Accounting profit is the same as economic profit.

E) A) and C)
F) A) and D)

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Assume that price is greater than average variable cost.If a perfectly competitive firm is producing at an output where price is $114 and the marginal cost is $102,then the firm is probably producing more than its profit-maximizing quantity.

A) True
B) False

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How are market price,average revenue,and marginal revenue related for a perfectly competitive firm and why?

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They are all equal to each other.The mar...

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In the short run,if price falls below a firm's minimum average total cost,the firm should shut down.

A) True
B) False

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Figure 12-2 Figure 12-2 -Refer to Figure 12-2.What is the amount of profit if the firm produces Q<sub>2</sub> units? A) It is equal to the vertical distance c to g. B) It is equal to the vertical distance c to Q<sub>2</sub>. C) It is equal to the vertical distance g to Q<sub>2</sub>. D) It is equal to the vertical distance c to g multiplied by Q<sub>2</sub> units. -Refer to Figure 12-2.What is the amount of profit if the firm produces Q2 units?


A) It is equal to the vertical distance c to g.
B) It is equal to the vertical distance c to Q2.
C) It is equal to the vertical distance g to Q2.
D) It is equal to the vertical distance c to g multiplied by Q2 units.

E) A) and B)
F) A) and D)

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Suppose there are economies of scale in the production of a specialized memory chip that is used in manufacturing microwaves.This suggests that the microwave industry is a decreasing-cost industry.

A) True
B) False

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Figure 12-5 Figure 12-5 Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 12-5.If the market price is $20,what is the average profit at the profit-maximizing quantity? A) $5 B) $6 C) $9 D) $20 Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry. -Refer to Figure 12-5.If the market price is $20,what is the average profit at the profit-maximizing quantity?


A) $5
B) $6
C) $9
D) $20

E) A) and B)
F) All of the above

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Max Shreck,an accountant,quit his $80,000-a-year job and bought an existing tattoo parlor from its previous owner,Sylvia Sidney.The lease has five years remaining and requires a monthly payment of $4,000.The lease


A) is a fixed cost of operating the tattoo parlor.
B) is a variable cost of operating the tattoo parlor.
C) is an implicit cost of operating the tattoo parlor.
D) is part of the marginal cost of operating the tattoo parlor.

E) A) and B)
F) All of the above

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What is a long-run supply curve? What does a long-run supply curve look like on a perfectly competitive market graph?

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A long run supply curve shows the relati...

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Showing 101 - 120 of 153

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