30. Average total cost 31. a. increases as output increases. b. decreases as output increases. c. increases if marginal cost is increasing. d. increases if marginal cost is greater than average total cost. e. both cand d A monopolist which suffers losses in the short run will continue to operate as long as total revenue covers fixed cost. raise price in order to eliminate losses. exit in the long run if there is no plant size that will result in economic profit that is greater than or equal to zero. both a and b both a and c 32. A profit-maximizing firm with market power will always produce a level of output where a. demand is elastic. b. demand is inelastic. c. price is greater than average total cost. d. marginal revenue is greater than average total cost. b. C. d. e. 33. A manager of a firm with market power faces the marginal revenue product and average revenue product Curves shown below. The firm incurs weekly fixed costs of $1,800. The firm employs a single variable input, labor, which costs $600 per worker each week. a. b. MRP and ARP (dollars) C. d. C. 1,400 1,200 1,000 800 600 400 200 0 2 4 $1,800 per week. -$1,800 per week. 6 Given the above, the maximum profit the firm can earn is $4,800 per week. $3,000 per week. $2,400 per week. MRP 8 10 12 14 16 18 Labor (workers per week) ARP 20