QUESTION 16 Jose's restaurant operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC= 20, AVC= 15, and the price per unit is 17. In this situation, a. Jose's restaurant is earning a positive economic profit. b. Jose's restaurant should shut down immediately. c. the market price will rise in the short run to increase profits. d. Jose's restaurant is making a loss but should continue to operate, because shutting down is more costly.
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- If Doug's Dry Cleaners operates in a perfectly competitive market, and its shutdown price is $12/shirt, what does this firms short run supply curve look like? Select one: a. starting from price at which Doug starts making some economic profit, the short run supply curve is his MC curve. O b. it is an upward sloping curve starting at origin C Doug supplies nothing up to $12/shirt; after that it is his MC curve d. Doug supplies nothing up to $12/shirt; after that it is his AVC curve e. None of the answers offered are accurate.QUESTION 41 Figure 14-13 Suppose a firm in a competitive industry has the following cost curves: 10 9 8 7 3.5 6 ↑Price 3+ 1 2 3 4 5 MC 6 7 8 ATC AVC Quantity Refer to Figure 14-13. If the price is $6 in the short run, what will happen in the long run? O a. Because the price is below the firm's average variable costs, the firms will shut down. O b. Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry. O c. Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry. O d. Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry.7. Assume that a purely competitive firm has the schedule of average and marginal costs given in the table below. Complete the short-run supply schedule and profits or losses for this firm. Outpu AFC AVC ATC MC t 0 1 2 3 4 5 6 7 8 9 10 P600 P200 P800 P200 300 150 450 100 200 140 340 120 150 145 295 160 120 160 280 220 100 180 280 280 86 205 291 360 76 232 314 460 66 276 342 580 60 320 380 720 Quantity Price supplied (-) P P580 460 360 280 220 160 Profit (+) or loss 120
- The average variable cost (AVC) 1 and average total cost (ATC) of a price taker firm are provided below. According to this table, if the marginal revenue (MR) is $95, what decision should this firm take in the short-run? Quantity Average Variable Cost Averge Total Cosm 100 25 100 20 150 20 150 23 100 15 100 17 100 19 15030 150 19 150.25 11 O Exit the market Enter in to the market The firm will go for a temporary shutdown Continue productionQUESTION 28 A perfectly competitive firm is producing at an output level of 1200 where marginal revenue is $15, marginal cost is $15, average variable cost is $14, average total cost is $21.50. The fim is O making a profit of $1,200 O making a loss of -$24,600 O making a loss of-$7,800 O making a profit of $7,800In the short run, a perfectly competitive firm Select one: a. can earn a small economic profit while being shut down. b. incurs an economic loss if it shuts down. O c. does not consider total revenue in its shut down decision. O d. shuts down if it incurs any economic loss.
- Refer to the diagram to the right which shows cost and demand curves facing a profit - maximizing perfectly competitive firm. At price P3¹ the firm would O A. lose an amount less than fixed costs. OB. break even. OC. lose an amount more than fixed costs. D. lose an amount equal to its fixed costs. C P Price and cost U D 0 a ठ 1 C d MC e f Q3 Q4 Quantity ATC AVC g Qred 1.00 pn ge Firm A operates in perfect competition, and the price the firm faces is greater than its average variable cost and less than its average total costs. If the firm does not expect price to change, firm A should: O a Shut down in the short run but operate in long run O b. Shut down in short run and in long run Oc. Operate in short run but shut down in long run Od. Shut down immediately Jump to O a. Increase production/output Ob. Shut down business Oc. Decrease production/output Od. Keep current production level Under perfect competition, if firm A's marginal revenue is greater than its marginal cost, what should firm A do to maximize its profit: AVAAN LUV1000 Evaluations Test 2-July 14th Which of the below is the difference between economic profit and accounting profit O a. Opportunity Cost O b. Revenue difference Oc: Explicit cost O d. Fixed cost Next page O e. Variable cost Next Activity Next ActivityConsider the following figure for a perfectly competitive firm in the short run. Price, Costs MC ATC AVC 30 26 20 12 ------ 10 ..---- .---- 8 12 21 30 32 40 Output Suppose the industry price is $20. If the firm produces its profit-maximizing or loss-minimizing output, then it will make a equal to Loss; $420 Profit ; $240 Loss ; $180 Loss; $240
- 40 30 20 10 10 15 20 25 30 Quantity The figure above portrays a total revenue curve for a perfectly competitive firm. The firm's marginal revenue from selling a unit of output Select one: O a. equals $0.50. O b. equals $1.00. O c. equals $2.00. O d. cannot be determined.QUESTION 22 What happens if a single firm in a perfectly competitive market raises its price above that charged by other firms? O a. It loses market share O b. Nothing happens because it has loyal customers O c. It goes out of business O d. It makes supernormal profit until other firms followA perfectly competitive firm maximizes profit by producing 100 units at an ave total cost of $12 and an average fix cost of $5 for a market price of $10. Its shutdown price will be - $10 O b. $5 $7 O d. $12 Show Transcribed Text Under perfectly competitive conditions, a firm should continue to produce - OaUntil total revenue is as high as possible Ob Until price is equal to marginal cost Oc Until profits are negative Od. While costs are falling, then stop Oe. Until there is no more revenue Show Transcribed Text A perfectly competitive firm maximizes profit by producing 200 units at an average total cost of $15 and an average fix cost of $5 for a market price of $25. Its total fixed cost will be- O a $3000 O b. $1000 O c. $1500 Od. $2000 Show Transcribed Text According to this principle, as successive units of a variable factor (say labor) are added to a fixed factor, beyond some point the marginal product attributed to every additional unit of that variable factor will decline. O a.…