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.

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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.

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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.

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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.

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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.

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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.

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Question 7

2pts

If a perfectly competitive firm raises its price, its sales decrease to zero.

Group of answer choices

True

False

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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.

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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)

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Question 10

2pts

In short-run equilibrium, a perfectly competitive firm can never earn an economic profit.

Group of answer choices

False

True