Question 7(1 point)

Saved

If price is between AVC and ATC, the best and most practical thing for a perfectly competitive firm to do is to:

Question 7 options:

lower prices to gain revenue from extra volume.

continue operating, but plan to go out of business.

shut down immediately, but not liquidate the business.

shut down immediately and liquidate the business.

raise prices.

Question 8(1 point)

Saved

An improvement in technology would result in

Question 8 options:

upward shifts of MC and reductions in output.

upward shifts of MC and increases in output.

increased quality of the good, but little change in MC.

downward shifts of MC and reductions in output.

downward shifts of MC and increases in output.

Question 9(1 point)

Saved

If a competitive firm's marginal cost curve is U-shaped then

Question 9 options:

its short run supply curve is the upward-sloping portion of the marginal cost curve

its short run supply curve is U-shaped too

its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average total cost curve

its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average variable cost curve

its short run supply curve is the downward-sloping portion of the marginal cost curve

Question 10(1 point)

Saved

Higher input prices result in

Question 10 options:

upward shifts of MC and reductions in output.

increased demand for the good the input is used for.

downward shifts of MC and reductions in output.

downward shifts of MC and increases in output.

upward shifts of MC and increases in output.

Question 11(1 point)

Saved

In a supply-and-demand graph, producer surplus can be pictured as the

Question 11 options:

vertical intercept of the supply curve.

area between the equilibrium price line and the supply curve to the left of equilibrium output.

area between the demand curve and the supply curve to the left of equilibrium output.

area under the supply curve to the left of equilibrium output.

area under the demand curve to the left of equilibrium output.

Question 15(1 point)

Saved

In a constant-cost industry, an increase in demand will be followed by

Question 15 options:

an increase in supply that will bring price down to the level it was before the demand shift.

an increase in supply that will bring price down below the level it was before the demand shift.

an increase in supply that will not change price from the higher level that occurs after the demand shift.

a decrease in demand to keep price constant.

no increase in supply.

Question 16(1 point)

Saved

In a constant-cost industry, price always equals

Question 16 options:

LRAC and minimum LRMC.

LRMC and minimum LRAC.

minimum LRAC, but not LRMC.

minimum LRAC and minimum LRMC.

LRMC and LRAC, but not necessarily minimum LRAC.

Question 17(1 point)

Saved

Suppose that short-run MC = 10 + 2Q for an individual firm in a competitive market. If there are 100 identical firms in this market, then the short-run supply curve can be written as

Question 17 options:

P = 10 + 0.02Q.

P = 1000 + 2Q.

P = 10 + 200Q.

P = 1000 + 200Q.

Question 18(1 point)

The response of a firm to an increase in input prices in the short run will be to

Question 18 options:

do nothing.

maintain output constant but change the mix of inputs.

reduce output as marginal cost rises.

increase output to increase revenue.

Question 19(1 point)

. Suppose that for the individual firm in a competitive market, LRAC = 100 - 20Q + 2Q². If this is a constant cost industry and demand can be represented as P = 100 - 0.1Q, how much output will the individual firm produce at long-run equilibrium?

Question 19 options:

5 units

10 units

-0 units

1 unit

Question 20(1 point)

. Suppose that TC = 20 + 10Q + Q²for a firm in a competitive market and that output, Q, sells for a price, P, of $90. How much output will the firm produce to maximize profit?

Question 20 options:

0

40

90

20

Question 21(1 point)

Suppose that the short-run production function is Q = 10L. If the wage rate is $4 per unit of labor, then average variable cost equals

Question 21 options:

40Q

40

.4Q

.4

Question 22(1 point)

Suppose that short-run total cost can be written as TC = 1000 + 100Q - 10Q²+ Q³. Then, AVC is minimized at what level of production?

Question 22 options:

AVC is horizontal.

Q = 100.

. Q =5.

Q = 10.

Question 23(1 point)

Output for a simple production process is given by Q = 2KL, where K denotes capital, and L denotes labor. The price

of capital is $25 per unit and capital is fixed at 8 units in the short run. The price of labor is $5 per unit. What is the total

cost of producing 80 units of output?

Question 23 options:

$525

$200

$233

$185

$225

Question 24(1 point)

Suppose a firm's production function is q=10X^1/2in the short run where there are fixed costs of $500 and X is the

variable input whosecost is $200 per unit.What is the total cost of producingq= 10 units of output?

Question 24 options:

$1000

$700

$1500

$2000

none of the above

Question 28(1 point)

In the long-run, any perfectly competitive firm that produces will choose a quantity such that

Question 28 options:

short-run average cost is minimized.

long-run average cost is minimized.

short-run marginal cost equals long-run marginal cost.

price equals marginal cost.

all of the above are true.

Question 29(1 point)

A firm's total revenue curve is given by 3Q²- 7Q . The firm

Question 29 options:

is perfectly competitive.

may be perfectly competitive

is not perfectly competitive.

one cannot tell.

Question 30(1 point)

Suppose you are the manager of a watchmaking firm operating in a competitive market. Your cost of

production is given by C = 200 + 2q^2,where q is the level of output and C is total cost. (The marginal cost

of production is 4q; the fixed cost is $200.)At price of watches at $100,your profit maximizing output of

watches will be ____and your profits will be $ _________.

Question 30 options:

30 and 1250

25 and 1050

40 and 1600

20 and 850

none of the above