Which of the following statements applies to a profit-maximizing (price-taking) firm in perfect competition?

Question 1 options:

A)	If marginal cost exceeds price, then output must be increased to reach the profit-maximizing point.

B)	If price exceeds marginal cost, then output must be increased to reach the profit-maximizing point.

C)	If average cost is greater than price at the profit-maximizing output, then the business is making a positive profit.

D)	If price exceeds average cost at the profit-maximizing output, then the business is making a loss.

E)	If price and average cost are equal, the business is at its shutdown point.

Which of the following is not a characteristic of perfect competition?

Question 2 options:

	Identical sellers
	Barriers to entry
	Barriers to exit
	All of the above
	None of the above

Marginal costs

Question 3 options:

	Include cash costs, opportunity costs and fixed costs
	Include cash costs and opportunity costs
	Include cash costs and fixed costs
	Include only cash costs

The term 'marginal product' refers to the

Question 4 options:

A)	increase in average product attributable to the employment of one more unit of a variable input, such as labour.

B)	increase in total revenue attributable to the employment of one more unit of a variable input, such as labour..

C)	increase in total cost attributable to the employment of one more unit of a variable input, such as labour..

D)	total product divided by the total units of a variable input (such as labour) employed.

E)	increase in total output attributable to the employment of one more unit of a variable input, such as labour..

The term 'short run' refers to a period of time during which...

Question 5 options:

A)	at least one input (and hence one source of costs) is fixed.

B)	all costs are fixed.

C)	the level of output is fixed.

D)	all inputs (and hence all costs) are variable.

E)	none of the above.

For any profit-maximizing monopolist charging a single price:

Question 6 options:

A)	Marginal revenue is constant for any given output (sales).

B)	Marginal revenue is always increasing as output (sales) increases.

C)	Marginal revenue is always decreasing as output (sales) increases.

D)	Marginal revenue is always equal to average revenue.

E)	Marginal revenue is always greater than average revenue.

You are the general manager of a price-setting firm (facing a downward sloping demand curve) that sets a single price for its product.

You are told that at the current price, marginal revenue is less than marginal cost, while avergage revenue is greater than average cost per unit.

If this is true, then in order to maximize profit, you should

Question 7 options:

A)	Increase output and decrease the price.

B)	Decrease output and increase the price.

C)	Maintain the current output level and price.

D)	Set the price so that the price elasticity of demand is (-)1.

E)	Set the price so that the price elasticity of demand is less than (-)1.

Which of the following statements applies to a profit-maximizing business?

Question 8 options:

a)	If marginal cost exceeds marginal revenue, then output must be increased to reach the profit-maximizing point

b)	If marginal revenue exceeds marginal cost, then output must be increased to reach the profit-maximizing point.

c)	If average cost is greater than price at the profit-maximizing output, then the business is making a positive profit.

d)	If price exceeds average cost at the profit-maximizing output, then the business is making a loss.

e)	If price and average cost are equal, the business is at its shutdown point

The social value created by a market is equal to

Question 9 options:

	The area under the demand curve and above the marginal cost (or supply) curve.
	The area under the demand curve and above the average cost curve.
	The area under the demand curve and above the price line.
	The area under the marginal revenue curve and above the marginal cost curve.

Which of the following impacts an indvidual's willingness to pay for a good or service?

Question 10 options:

	Prices and availability of substitute goods
	None of the above
	All of the above
	The prices and availability of complementary goods
	The individual's income or wealth