1A) Perfect competition is a market structure in which there is:
a. a contest among firms to provide good service after the sale.
b. competition in product quality.
c. rivalry in product design. d. none of these.
1B)
If a firm increases output when MR < MC, then:
a.
profit will remain the same.
b.
the firm is minimizing losses.
c.
profit will increase.
d.
profit will decrease.
e.
profit will equal zero.
1A) Perfect competition is a market structure in which there is:
a. a contest among firms to provide good service after the sale.
b. competition in product quality.
c. rivalry in product design. d. none of these.
1B)
If a firm increases output when MR < MC, then:
a. |
profit will remain the same. |
|
b. |
the firm is minimizing losses. |
|
c. |
profit will increase. |
|
d. |
profit will decrease. |
|
e. |
profit will equal zero. |
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QUESTION 22
For a perfectly competitive firm, profit maximization (or loss minimization) occurs at the level of output at which
a. |
MR = MC. |
|
b. |
MR = AVC. |
|
c. |
P = ATC. |
|
d. |
MR = ATC. |
4 points
QUESTION 23
If MR > MC, then
a. |
profits are being maximized. |
|
b. |
the firm is producing too much of the good to be maximizing profits. |
|
c. |
the firm can increase its profits (or minimize its losses) by increasing output. |
|
d. |
the firm must be incurring losses. |
4 points
QUESTION 24
If firms are earning zero economic profits, they must be producing at an output level at which
a. |
price minus marginal cost. |
|
b. |
total revenue equals total costs, in other words, normal profits. |
|
c. |
price equals average variable cost. |
|
d. |
marginal revenue equals marginal cost. |
|
e. |
none of the above |
4 points
QUESTION 25
In the theory of perfect competition,
a. |
the market demand curve is horizontal. |
|
b. |
the single firm faces a horizontal demand curve. |
|
c. |
the single firm faces a downward-sloping demand curve. |
|
d. |
the market demand curve is downward sloping. |
|
e. |
b and d |