Multiple Choice (20 pt)
7,700-200Q+Q. What is the firm's shutdown price? A $45 B $200 C $1,100 D $18
A. The market price is determined through regulation by the government.
B. The firm supplies a different good than its rivals.
C. The firm's output is a small fraction of the entire industry's output.
D. The short-run market price is determined solely by the firm's technology.
E. The demand curve for the industry's output is downward sloping.
3. The presence of capital rental markets gives firms:
A. The ability to hire more labor in periods of high demand by keeping capital costs fixed.
B. Reduced flexibility in substituting among various labor and capital inputs.
C. The ability to hire more capital in periods of high demand by keeping capital costs fixed.
D. The flexibility to adjust capital usage to output levels, making capital costs variable.
Based on the figure, how many units of output will the firm produce at the equilibrium price?
A. 1,100 B. 800 C. 1,200 D. 400
24 21 18 15 12
6
6 5 10 12 14 16 18 20 Quantity 100
A. Raise prices.
B. Lower prices to gain revenue from extra volume.
C. Shut down immediately, but not liquidate the business.
D. Shut down immediately and liquidate the business.
E. Continue operating, but plan to go out of business.
6. A firm never operates:
A. At the minimum of its ATC curve.
B. At the minimum of its AVC curve.
C. On the downward-sloping portion of its ATC curve.
D. On the downward-sloping portion of its AVC curve.
E. On its long-run marginal cost curve.
