Question 1

What is the significance of equating marginal cost and marginal revenue?

Accepted Answer

When a firm equates marginal c

Question 2

Suppose that the total fixed cost for a guitar manufacturer is $90.The marginal cost of the first guitar produced is $80 and decreases by $10 for the next three guitars produced.Thereafter,the marginal cost increases by $10 for each successive guitar.
-Refer to the information above to answer this question.If the manufacturer can sell her guitars for $100,how many should she produce in order to maximize her profits?

Accepted Answer

A) 0. 
B) 6. 
C) 7. 
D) 8. 
E) 9. 
A) 0. 
B) 6. 
C) 7. 
D) 8. 
E) 9.

Question 3

The total fixed costs of a perfectly-competitive manufacturer are $500,and its marginal costs are as follows:
  
-Refer to the above information to answer this question.If the price of the product is $160,how many will the manufacturer produce and what will be its profit or loss?

Accepted Answer

A) 0 and a loss of $500. 
B) 5 and a loss of $190. 
C) 5 and a profit of $310. 
D) 6 and a loss of $240. 
E) 8 and a profit of $140. 
A) 0 and a loss of $500. 
B) 5 and a loss of $190. 
C) 5 and a profit of $310. 
D) 6 and a loss of $240. 
E) 8 and a profit of $140.

Question 4

The following graph shows the costs for a perfectly competitive producer:
  
-Refer to the above graph to answer this question.What is the value of the break-even price?

Accepted Answer

A) $10. 
B) $15. 
C) $20. 
D) $1,200. 
E) Cannot be determined. 
A) $10. 
B) $15. 
C) $20. 
D) $1,200. 
E) Cannot be determined.

Question 5

Profit maximization occurs at the output where marginal revenue equals zero.

Accepted Answer

A) True 
 B)False

Question 6

The following graph (A)represents the cost curves for a representative firm in a perfectly competitive market.The market demand is shown in graph (B):
  
-Refer to the above graph above to answer this question.At the equilibrium price in this market,what will be the representative firm's output?

Accepted Answer

A) 0. 
B) 25. 
C) 30. 
D) 35. 
E) 40. 
A) 0. 
B) 25. 
C) 30. 
D) 35. 
E) 40.

Question 7

The Competitive Industry and Firm
-Refer to the graph above to answer this question.What are the values of the shut-down price and the break-even price?

Accepted Answer

A) $10 and $20. 
B) $10 and $40. 
C) $10 and $50. 
D) $20 and $40. 
E) Cannot be determined from this information. 
A) $10 and $20. 
B) $10 and $40. 
C) $10 and $50. 
D) $20 and $40. 
E) Cannot be determined from this information.

Question 8

The following table shows a profit-maximizing producer's marginal costs.The firm is operating in a perfectly competitive market and has fixed costs of $500.
  
-Refer to the above information to answer this question.What is the break-even price?

Accepted Answer

A) $150. 
B) $170. 
C) $270. 
D) $280. 
E) $500. 
A) $150. 
B) $170. 
C) $270. 
D) $280. 
E) $500.

Question 9

The following are different market structures:
1. Monopoly
2. Perfect Competitions
3. Monopolistic Competition
4. Undifferentiated Oligopoly
5. Differentiated Oligopoly
-Refer to the above information to answer this question.What is the name of the market in which there are a few large sellers and the product is identical?

Accepted Answer

A) 1. 
B) 2. 
C) 3. 
D) 4. 
E) 5. 
A) 1. 
B) 2. 
C) 3. 
D) 4. 
E) 5.

Question 10

Table 8.8 refers to a perfectly competitive firm.
  
-Refer to Table 8.8 to answer this question.If the price is $10,what profit or loss will this producer earn?

Accepted Answer

A) 0. 
B) -$4.40. 
C) +$4.40. 
D) +$22. 
E) +$32. 
A) 0. 
B) -$4.40. 
C) +$4.40. 
D) +$22. 
E) +$32.

Question 11

In order to maximize its profits,a firm will produce an output at which the marginal revenue equals the marginal cost.

Accepted Answer

A) True 
 B)False

Question 12

For each of the following cases,a)through d),you are given certain cost and price information for a competitive firm at its present output level.Assuming the short run and that marginal costs are increasing in all cases,indicate whether each firm should:
i)produce more
ii)produce less
iii)shut down
iv)cannot be determined from this information
a)minimum AVC exceeds price
b)TFC less than TR
c)MC exceeds price and price exceeds AVC
d)TC exceeds TR

Accepted Answer

a)iii
b)iv

Question 13

The following questions are based on the key below.Assume that you are given cost and price data for a number of competitive firms at their present output levels.In all cases the marginal cost is increasing.With this information,indicate whether each firm should,in the short run:
1.produce more
2.produce less.
3.shut down
4.cannot be determined from the information.
-Refer to the information above to answer this question.If the firm's total costs exceed its total revenue,what should the firm do?

Accepted Answer

A) 1. 
B) 2. 
C) 3. 
D) 4. 
A) 1. 
B) 2. 
C) 3. 
D) 4.

Question 14

Explain why average revenue is equal to marginal revenue for a perfectly competitive firm?

Accepted Answer

A perfectly competitive firm faces a per

Question 15

Suppose that the total fixed cost for a guitar manufacturer is $90.The marginal cost of the first guitar produced is $80 and decreases by $10 for the next three guitars produced.Thereafter,the marginal cost increases by $10 for each successive guitar.
-Refer to the information above to answer this question.What is the manufacturer's shut-down price?

Accepted Answer

A) 0. 
B) $64. 
C) $65. 
D) $80. 
E) $90. 
A) 0. 
B) $64. 
C) $65. 
D) $80. 
E) $90.

Question 16

Figure 8.13 refers to a perfectly competitive firm.
  
-Refer to Figure 8.13 to answer this question.What is the value of the shutdown price?

Accepted Answer

A) $0. 
B) $10. 
C) $20. 
D) $40. 
E) Cannot be determined from the information. 
A) $0. 
B) $10. 
C) $20. 
D) $40. 
E) Cannot be determined from the information.

Question 17

Explain why a firm will continue to operate as long as its loss is no greater than its total fixed costs.

Accepted Answer

A firm will continue to operate as long

Question 18

Draw a demand curve,marginal revenue curve,marginal cost curve,average total cost curve,and an average variable cost curve for a perfectly competitive firm indifferent between shutting down and operating.

Accepted Answer

The answer of Draw a demand curve,marginal revenue curve,marginal cost...

Question 19

How is average revenue defined?

Accepted Answer

A) It is the extra revenue derived from the sale of one more unit. 
B) It is the total revenue divided by the number of units sold. 
C) It is marginal revenue divided by the number of units sold. 
D) It is the sum of the marginal revenue of all units sold. 
A) It is the extra revenue derived from the sale of one more unit. 
B) It is the total revenue divided by the number of units sold. 
C) It is marginal revenue divided by the number of units sold. 
D) It is the sum of the marginal revenue of all units sold.

Question 20

Table 8.8 refers to a perfectly competitive firm.
  
-Refer to Table 8.8 to answer this question.What is the profit-maximizing output if the price is $3?

Accepted Answer

A) 0. 
B) 3. 
C) 4. 
D) 5. 
E) 6. 
A) 0. 
B) 3. 
C) 4. 
D) 5. 
E) 6.

What is the significance of equating marginal cost and marginal revenue?

The total fixed costs of a perfectly-competitive manufacturer are $500,and its marginal costs are as follows: -Refer to the above information to answer this question.If the price of the product is $160,how many will the manufacturer produce and what will be its profit or loss?

The following graph shows the costs for a perfectly competitive producer: -Refer to the above graph to answer this question.What is the value of the break-even price?

Profit maximization occurs at the output where marginal revenue equals zero.

The following graph (A)represents the cost curves for a representative firm in a perfectly competitive market.The market demand is shown in graph (B): -Refer to the above graph above to answer this question.At the equilibrium price in this market,what will be the representative firm's output?

The Competitive Industry and Firm -Refer to the graph above to answer this question.What are the values of the shut-down price and the break-even price?

The following table shows a profit-maximizing producer's marginal costs.The firm is operating in a perfectly competitive market and has fixed costs of $500. -Refer to the above information to answer this question.What is the break-even price?

Table 8.8 refers to a perfectly competitive firm. -Refer to Table 8.8 to answer this question.If the price is $10,what profit or loss will this producer earn?

In order to maximize its profits,a firm will produce an output at which the marginal revenue equals the marginal cost.

Explain why average revenue is equal to marginal revenue for a perfectly competitive firm?

Figure 8.13 refers to a perfectly competitive firm. -Refer to Figure 8.13 to answer this question.What is the value of the shutdown price?

Explain why a firm will continue to operate as long as its loss is no greater than its total fixed costs.

Draw a demand curve,marginal revenue curve,marginal cost curve,average total cost curve,and an average variable cost curve for a perfectly competitive firm indifferent between shutting down and operating.

How is average revenue defined?

Table 8.8 refers to a perfectly competitive firm. -Refer to Table 8.8 to answer this question.What is the profit-maximizing output if the price is $3?

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

Exam 8: Perfect Competition

What is the significance of equating marginal cost and marginal revenue?

The total fixed costs of a perfectly-competitive manufacturer are $500,and its marginal costs are as follows: -Refer to the above information to answer this question.If the price of the product is $160,how many will the manufacturer produce and what will be its profit or loss?

The following graph shows the costs for a perfectly competitive producer: -Refer to the above graph to answer this question.What is the value of the break-even price?

Profit maximization occurs at the output where marginal revenue equals zero.

The following graph (A)represents the cost curves for a representative firm in a perfectly competitive market.The market demand is shown in graph (B): -Refer to the above graph above to answer this question.At the equilibrium price in this market,what will be the representative firm's output?

The Competitive Industry and Firm -Refer to the graph above to answer this question.What are the values of the shut-down price and the break-even price?

The following table shows a profit-maximizing producer's marginal costs.The firm is operating in a perfectly competitive market and has fixed costs of $500. -Refer to the above information to answer this question.What is the break-even price?

Table 8.8 refers to a perfectly competitive firm. -Refer to Table 8.8 to answer this question.If the price is $10,what profit or loss will this producer earn?

In order to maximize its profits,a firm will produce an output at which the marginal revenue equals the marginal cost.

Explain why average revenue is equal to marginal revenue for a perfectly competitive firm?

Figure 8.13 refers to a perfectly competitive firm. -Refer to Figure 8.13 to answer this question.What is the value of the shutdown price?

Explain why a firm will continue to operate as long as its loss is no greater than its total fixed costs.

Draw a demand curve,marginal revenue curve,marginal cost curve,average total cost curve,and an average variable cost curve for a perfectly competitive firm indifferent between shutting down and operating.

How is average revenue defined?

Table 8.8 refers to a perfectly competitive firm. -Refer to Table 8.8 to answer this question.What is the profit-maximizing output if the price is $3?

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Elasticity

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters