Multiple Select Question Select all that apply In a purely competitive industry, at the profit-maximizing or loss-minimizing level of output, marginal ____ is equal to ____. ? cost; price ? revenue; marginal cost ? revenue; price ? output; marginal cost
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From the list on your right select the letter that contains the word, phrase, name, etc that best matches the word, phrase, name, etc listed on the left. A firm in a perfectly competitive market The market demand curve in a perfectly competitive market Produce the output level where MR = MC MR < MC; reduce output In the short-run if Price is below Average Cost and above Average Variable Cost zero economic profit (P - MC) = 0 A firm in perfect competition faces equilibrium Price = $5.50, Quantity = 200, Average Cost = $7.50, and Average Variable Cost = $6.50 Profit A constant cost industry A. Downward sloping long-run supply curve B. Downward sloping C. Shutdown because Price is below Average Variable Cost D. Allocative efficiency E. Quantity changes at a constant rate F. Perfectly competitive market in the long-run equilibrium given P = AC G. A firm in perfect competition will continue to produce H. ΔTC / ΔQ I. Profit maximization rule J. Perfectly inelastic demand curve K. = (P - AC) x Q L. No control over price at which the product is sold M. Perfectly elastic long-run supply curve N. A firm in perfectly competitive market must reduce price to sell more units (Law of Demand) O. The last unit of a good produced added more to total cost than it add to total revenue
Akash M.
The following two questions refer to the cost and revenue conditions of a monopolistically competitive firm shown in the graph below. MC = marginal cost, ATC = average total cost, AVC = average variable cost, and MR = marginal revenue. 32. The firm's profit-maximizing output in the short run is (A) zero, because P < AVC (B) Q1, because MR = MC (C) Q2, because P = MC (D) Q3, because MC = ATC (E) impossible to determine. 33. Which of the following will the firm do in the long run if market conditions do not change? (A) It will increase output to Q2 and lower price to P2 to minimize losses. (B) It will increase output to Q3 and raise price to P4 to earn zero economic profit. (C) It will produce Q1 and set price equal to marginal revenue. (D) It will exit the industry. (E) It will build a larger plant to achieve decreasing returns to scale. 34. Assume a perfectly competitive firm is currently producing 100 units of output. Its marginal cost is $6 and rising at that output quantity. Its average variable cost is $7 and its average fixed cost is $3. If the product's price is $6, which of the following will the firm do in the short run to maximize its profit? (A) Shut down (B) Produce, but less than 100 units of output (C) Produce more than 100 units of output (D) Continue to produce at exactly 100 units of output (E) Increase its price above $6
Andrew D.
In the short run, a firm operating in a monopolistically competitive market a. produces an efficient output level. b. chooses the maximum price to maximize profits. c. produces where marginal cost is minimized. d. chooses a price that exceeds marginal revenue.
Varun I.
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