Question
The Hound Dog Bus Company contemplates expanding its New Mexico operations by offering services from Raton to Santa Fe. It has estimated that the total
The Hound Dog Bus Company contemplates expanding its New Mexico operations by offering services from Raton to Santa Fe. It has estimated that the total cost of the trip will be $400, of which $150 is the fixed cost, which it has already paid. The company expects an increase in revenue by $275 from the trip. The Hound Dog Bus Co. should _____
Group of answer choices
offer this service because the additional revenue exceeds the additional cost of this service.
offer this service because it will earn zero profit.
offer this service because total revenue exceeds fixed cost.
not offer this service because marginal revenue is less than marginal cost.
not offer this service because total cost exceeds total revenue.
Flag this Question
Question 2
2pts
Suppose a perfectly competitive firm and industry is in long-run equilibrium. A rightward shift of the market demand curve is likely to _____
Group of answer choices
shift the demand curve facing the firm downward and increase the quantity supplied in the market.
shift the demand curve facing the firm upward and increase quantity supplied in the market.
shift the demand curve facing the firm downward and not cause any change in the quantity supplied in the market.
shift the demand curve facing the firm downward and decrease the quantity supplied in the market.
shift the demand curve facing the firm upward and not cause any change in the quantity supplied in the market.
Flag this Question
Question 3
2pts
Exhibit 8.13
Refer to Exhibit 8.13, which shows a perfectly competitive market. Area A represents _____
Group of answer choices
the floor.
a public good.
the ceiling.
the consumer surplus.
the producer surplus.
Flag this Question
Question 4
2pts
Thegolden rule of profit maximizationsays that _____
Group of answer choices
profit-maximizing firms produce where marginal revenue equals total cost.
profit-maximizing firms produce where marginal cost is greater than marginal revenue.
profit-maximizing firms produce where marginal revenue is less than marginal cost.
profit-maximizing firms produce where marginal revenue equals marginal cost.
profit-maximizing firms produce where total revenue equals marginal cost.
Flag this Question
Question 5
2pts
For a perfectly competitive firm, ____
Group of answer choices
price equals marginal revenue only at the profit-maximizing quantity.
price is less than marginal revenue only at the profit-maximizing quantity.
price is less than marginal revenue at all output levels.
price equals marginal revenue at all output levels.
price exceeds marginal revenue at all output levels.
Flag this Question
Question 6
2pts
If a firm is not productively efficient, it _____
Group of answer choices
earns a normal profit in the short run.
sells its product at the lowest possible price.
produces what consumers demand.
must adjust its scale or exit the industry.
earns a positive economic profit.
Flag this Question
Question 7
2pts
If a perfectly competitive firm raises its price, its sales decrease to zero.
Group of answer choices
True
False
Flag this Question
Question 8
2pts
Exhibit 8.9
Refer to Exhibit 8.9, which shows a perfectly competitive firm's short-run output decisions.To minimize its short-run loss, the firm produces at point _____
Group of answer choices
3.
1.
5.
4.
2.
Flag this Question
Question 9
2pts
For perfectly competitive firms, which of the following correctly shows the relationship among market price (P), average revenue (AR), and marginal revenue (MR)?
Group of answer choices
price = average revenue (AR) = marginal revenue (MR)
price < average revenue (AR) = marginal revenue (MR)
price > average revenue (AR) = marginal revenue (MR)
price = average revenue AR > marginal revenue (MR)
price = average revenue (AR) < marginal revenue (MR)
Flag this Question
Question 10
2pts
In short-run equilibrium, a perfectly competitive firm can never earn an economic profit.
Group of answer choices
False
True
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started