serction 2

1.A firm will shut down in the short run if

(A) TR = TC

(B) P < AVC

(C) P = MC

(D) TR < TC

(E) P < ATC

2.Suppose a firm finds itself in a case where the profit-maximizing decision is to shut down. In this situation,

the firm will produce ___________ units 262of output and earn economic profit equal to ___________.

(A) Zero; -TFC

(B) Zero; zero

(C) The most possible; zero

(D) More than zero; -TC

(E) Zero; -TVC

3.The shut-down point is located at

4.The short-run profit-maximizing decision in perfect competition is to produce where

(A) P = MC > MR

(B) P = MR = MC = AVC

(C) P = MR = ATC > MC

(D) P = MR = MC > AVC

(E) P > MR = MC

5You are told that a perfectly competitive firm is maximizing profit in the short run and that economic profits

are positive. It must be the case that price is equal to __________ and price must also be __________.