Question : 70) In a perfectly competitive market, the market price $23. : 1241232

70) In a perfectly competitive market, the market price is $23. At the current level of output, a firm has a marginal cost of $28. What should the firm do?

A) produce a larger output to make more profit

B) nothing, it is currently maximizing profit

C) produce less output to make more profit

D) shut down

E) raise the price of its product

71) A perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4. The price of the good is $5. To maximize its profit, this firm should

A) raise its price.

B) lower its price.

C) increase its output.

D) decrease its output.

E) increase the price it charges for its product.

72) Suppose that a perfectly competitive firm’s marginal revenue equals $12 when it sells 10 units of output. If the marginal cost of producing the 10th unit is $14, to maximize its profit the firm should

A) do nothing because it is already maximizing its profit.

B) decrease its production.

C) increase its production.

D) shut down.

E) increase the price it charges for its product.

73) Shama is producing candles in a perfectly competitive market. When she produces 500 candles, her total cost is $250. If she produces one additional candle, her total cost increases to $260. In order to maximize her profit, she should produce the additional candle

A) if the market price for a candle is $12.

B) only if the market price exceeds $260 for a candle.

C) only if the market price exceeds $250 for a candle.

D) if the market price for a candle exceeds $0.50.

E) if her price exceeds her average total cost.

74) Jennifer’s Bakery Shop produces baked goods in a perfectly competitive market. If Jennifer decides to produce her 100th batch of cookies, the marginal cost is $120. She can sell this batch of cookies at a market price of $110. To maximize her profit, Jennifer should

A) not produce this additional batch.

B) produce this batch of cookies because they will help lower her average fixed cost.

C) charge $120 for this batch.

D) shut down.

E) produce this batch of cookies because their MR exceeds their MC.

75) Henry, a perfectly competitive lime grower in Southern California, notices that the market price of limes is greater than his marginal cost. What should Henry do?

A) expand his output to increase profits

B) shut down and incur a loss equal to his total fixed cost

C) advertise his limes to be able to sell more output

D) look for the output level where marginal revenue minus marginal cost is maximized

E) shut down and earn no profit but also incur no loss

76) Jerry’s Jellybean Factory produces 2,000 pounds of jellybeans per month and sells them in a perfectly competitive market. The marginal cost is $3 per pound, the average variable cost is $2 per pound, and the beans sell for $4 per pound. Jerry

A) is maximizing profit.

B) is incurring an economic loss and should shut down.

C) could increase his profit by producing more beans.

D) could increase his profit by producing fewer beans.

E) could increase his profit by raising the price of his beans.

77) If a perfectly competitive firm’s marginal revenue is greater than its marginal cost, as it increases its output, its profit ________ and the price it can charge for its product ________.

A) increases; does not change

B) decreases; falls

C) increases; falls

D) decreases; rises

E) decreases; does not change

78) Mark owns a cattle ranch near Hugo, Oklahoma. Mark is currently producing beef at an output level where marginal revenue exceeds marginal cost. In order to maximize his profit, Mark should

A) not change his output.

B) decrease his output.

C) increase his output.

D) shut down his ranch.

E) probably change his output, but more information is needed to determine if he should increase, decrease, or not change it.

79) During the winter, theme parks in Orlando close earlier than in the summer. The reason the theme parks close early during the winter is because during that season the marginal revenue from staying open later is ________ the marginal cost.

A) greater than

B) less than

C) equal to

D) zero compared to

E) not comparable to

80) A perfectly competitive firm is earning an economic profit when total fixed costs increase. Assuming the firm does not shut down, in the short run the firm will

A) charge a higher price.

B) produce more output so the extra revenue will cover the increased costs.

C) produce less output to decrease total costs.

D) continue producing the same quantity as before but will make less economic profit.

E) continue producing the same quantity as before and continue making the same economic profit as before.