ECON 120 Lecture Notes - Lecture 7: Fixed Cost, Production Function, Telomerase Reverse Transcriptase

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2 Nov 2016

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Test 2 answer key (fall 2013) marginal cost exceeds its marginal revenue the market price is less than its average variable cost price exceeds its marginal revenue. The answer cannot be determined with the information given: (12 pts. ) At 30 units of output, a firm"s marginal cost and average variable cost each equal . Therefore, assuming normally shaped cost curves, at 29 units of output, the firm"s marginal cost: (12 pts. ) If a perfectly competitive seller can increase its profits or reduce its losses by increasing output, then it must be the case that the seller"s: marginal revenue exceeds its marginal cost, (12 pts. ) Assume that a perfectly competitive seller is operating in the short-run, and is producing its profit maximizing level of output. If the seller is earning a positive economic profit, then all of the following are true except: (12 pts. )

Related Questions

1. When a fine caterer produces 30 catered meals, its marginal cost and average variable cost each equal $10. Therefore, assuming normally shaped cost curves, at 29 meals:

a) its marginal cost is less than $10 and its average variable cost is more than $10.

b) its marginal cost and its average variable cost are each equal to $10.

c) its marginal cost is greater than $10 and its average variable cost is less than $10.

d) its marginal cost and its average variable cost are each greater than $10.

2. Suppose Cyd knows the average total cost of producing 9 scones is $5, while the average total cost of producing 10 scones is $5.20. What is the marginal cost of the 10th scone?

a) $5

b) $5.20

c) $0.20

d) $7

3. Kaile Cakes produces 10 cakes per day. The marginal cost of the tenth cake is $24, and the average total cost of 10 cakes is $6. The average total cost of 9 cakes is:

a) $8.

b) $5.

c) $6.

d) $4.

4. The marginal cost curve is the mirror image of the:

a) average product curve.

b) marginal product curve.

c) total product curve.

d) average total cost curve.

burgundypanda330

1. Competitive markets are characterized by

a. The interdependence of firms.

b. A small number of buyers and sellers.

c. Free entry and exit by firms.

d. Unique products.

2. A firm that shuts down temporarily has to pay

a. Both its variable costs and fixed costs.

b. Its variable costs but not its fixed costs.

c. Its fixed costs but not its variable costs.

d. Neither its variable costs nor its fixed costs.

3. A profit-maximizing firm will shut down in the short run when

a. Average revenue is greater than the average fixed cost.

b. Price is less than the average total cost.

c. Average revenue is greater than marginal cost.

d. Price is less than average variable cost.

brownsea-lion330

Assume that for a perfectly competitive firm marginal revenue equals rising marginal cost at 100 units of output. At this output level, the firm's total fixed cost is $600 and its total variable cost is $400. If the price of the product is $10 per unit, the firm should produce

Select one:

a. zero units of output.

b. less than 100 units of output.

c. 100 units of output.

d. more than 100 units of output.

e. Cannot be determined from the information given.

When the marginal-cost curve lies below the marginal-revenue curve

Select one:

a. the firm cannot improve its profit since revenue is already greater than cost.

b. marginal revenue is greater than marginal cost, and the firm should therefore increase production to increase profits.

c. marginal revenue is greater than marginal cost, and the firm should therefore decrease production to increase profits.

d. marginal revenue is less than marginal cost, and the firm should therefore decrease production to increase profits.

e. it is not possible for this firm to increase profits since it is failing to operate at an efficient point.

ECON 120 Lecture Notes - Lecture 7: Fixed Cost, Production Function, Telomerase Reverse Transcriptase

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