1. What is a characteristic of a competitive market? a. Each seller can sell all he wants to sell at the going price. b. Sellers are price setters. C . The goods offered by the different sellers are heterogeneous. d. There are barriers to entry. Price ATC MC AVC PA Pa P2 Q1 Q3 Q4 Quantity 2 . Refer to the above figure. When market price is P5, which area represents a profit-maximizing firm's profits? a. (P5 - P4) x Q2 b. (P5 - P3) x Q2 C. (P5 - P4) x Q3 d. (P5 - P3) x Q3o: o: o; o. M 3. Refer to the above gure. When market price is P1, which area represents a prot-maximizing rm's total revenue? a. Ple2 b. P1XQ3 c. PZXQZd. P2XQ3 4. For a rm in a perfectly competitive market, what must the price of the good always be? a. equal to marginal revenue b. equal to total revenue c. greater than average revenue d. less than average revenue 5. When a perfectly competitive rm makes a decision to shutdown, which is most likely? a. Marginal cost is above average variable cost. b. Marginal cost is above average total cost. c. Price is below the minimum of average variable cost. d. Fixed costs exceed variable costs. 6. At the prot-maximizing level of output, which equation is correct? a. Marginal revenue = Average total cost b. Marginal revenue = Average variable cost c. Marginal revenue = Marginal cost d. Average revenue = Average total cost 7. For any given price, a rm in a competitive market will maximize prot by selecting the level of output where price intersects which curve? a. average-total-cost curve b. average-variable-cost curve c. ma rginal-cost curve d. ma rginal-reven ue curve 8. A prot-maximizing rm in a competitive market is currently producing 100 units of output. It has average revenue of $10, and its average total cost is 59. Does the rm have prots or losses? a. The rm has a loss of 5100. b. The rm has a prot of 5100. c. The rm has a loss of 5200. d. The rm has a prot of $200. 9. Refer to the above gure. What is this rm making? a. a loss equal to the area P*XBC b. a prot equal to the area BCOQ\" c. a prot equai] to the area P*XBC cl. a loss equal to the area P*XOQ* 10. Assume a rm is producing 500 units of output and that it sells each unit for $6. Its average total cost is S4. What is its prot? a. -$2000 b. -$1000 C. $1000 d. $2000