1.What is the average revenue if a firm sells 7 units at a market price of $25?

Select one:

a.

$0

b.

$7

c.

$175

d.

$25

2.

Table 1

Q TC TVC

0 $1,000 $0

100 1,360 360

200 1,560 560

300 1,960 960

400 2,760 1,760

500 4,000 3,000

600 5,800 4,800

Table 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.

What is average fixed cost of production for 500 units?

Select one:

a.

$3000

b.

$0

c.

$4000

d.

$2

In the Long-Run. firms in a perfectly competitive market ____________ .

Select one:

a.

shut down because profit goes to zero

b.

always earn zero economic profit

c.

lose money

d.

are not profit maximizing

For profit maximizing firms in a perfectly competitive industry, which of the following statements isFALSE?

Select one:

a.

Marginal revenue does not have to equal marginal cost

b.

Firms earn no economic profit in the long run

c.

Price equals marginal revenue

d.

p - MC = 0

When a perfectly competitive firm'saverage variable costis more than price (for any Q), the firm:

Select one:

a.

all of the above

b.

is earning a profit

c.

Immediately shut down

d.

should increase price