Question 21

If marginal revenue of a firm is greater than its marginal cost at a given level of output,

Group of answer choices

this firm should shut-down because its losses are greater than its TFC.

it should increase its output to increase its profits or decrease its losses.

it should decrease its output to increase its profits or decrease its losses.

this firm is definitely making an economic profit.

Question 22

Answer the question on the basis of the following data confronting a firm, which can sell as many units of output as it wants at the same price of $10,

OUTPUTMARGINAL COST (MC)

0--

1$8

27

36

49

512

615

Refer to the data.What is the amount of economic profits this firm makes at its optimal level of output?

Group of answer choices

$8.

$10.

$12.

$14.

Question 23

Which of the following statements is NOTcorrect?

Group of answer choices

The demand curve for a purely competitive industry is horizontal.

The supply curve of a perfectly competitive industry is positively sloping.

For a perfectly competitive firm price is always equal to marginal revenue.

When a perfectly competitive firm equates price to its MC, it will either maximize profits or minimize losses.

Question 24

Which of the following industry can be characterized as an oligopoly?

Group of answer choices

Shoes.

Wheat.

National Football League.

Cell phones.

Question 25

A firm finds that at its optimal output, itsTC = $2,000, TVC = $1,500 and total revenue is $1,400. This firm should:

Group of answer choices

shut down in the short run.

stay open (continue to produce) because its loss would be even greater if it shuts down.

produce because it will realize an accounting profit.

raise its price to eliminate its losses.

Question 26

Which of the following is a characteristic of monopolistic competition?

Group of answer choices

Free entry and exit.

A standardized product.

Mutual interdependence among firms.

A larger number of sellers.

Question 27

If a firm is a price-taker,

Group of answer choices

its marginal revenue will equal price.

its demand curve will be perfectly elastic.

Both of the above.

None of the above.

Question 28

A perfectly competitive firm earns an economic profit if it produces an output at which:

Group of answer choices

its marginal cost is equal to its marginal revenue.

its marginal revenue is greater than its average total cost.

its marginal cost intersects its average total cost at its minimum.

its marginal cost is declining.

Question 29

AP (average product) of a variable input at a given point on a TP (total product) function is

Group of answer choices

the slope of the tangent to the TP curve at that point.

the slope of the line which connect that point to the origin.

always less than the AP of the previous unit of the variable input.

always equal to 1.

Question 30

A purely competitive firm's short-run supply curve is positively sloping because:

Group of answer choices

of the law of diminishing returns.

production can take place in either stage 1 or stage 2.

its demand curve is negatively sloping.

the average total cost is U-shaped.