Question : 61) Consider a perfectly competitive industry in the short-run. When : 1384226

61) Consider a perfectly competitive industry in the short-run. When a firm in this industry is at its profit-maximizing level of output, it

A) is doing as well as it can and is making a profit.

B) may be making a profit or incurring a loss.

C) is producing where P = AVC.

D) is producing where MC = AC.

E) is producing where price exceeds marginal cost.

62) In the short run, a profit-maximizing firm will expand output

A) as long as marginal revenue is greater than marginal cost.

B) until marginal cost begins to rise.

C) until marginal revenue equals average variable cost.

D) until total revenue equals total cost.

E) as long as marginal cost is greater than marginal revenue.

63) Suppose ABC Corp. is a firm producing newsprint in a perfectly competitive industry. Its output is 1500 tonnes per month, the marginal cost of the last tonne produced is $710, and the average revenue per tonne is $620. In the short run, this firm should

A) reduce output.

B) increase output until average revenue is equal to marginal cost.

C) increase output until marginal revenue is equal to marginal cost.

D) definitely shut down.

E) The price of the product is not known, so it is not possible to determine.

64) Suppose ABC Corp. is a firm producing newsprint in a perfectly competitive industry. We have the following information about the firm’s production:

A) reduce output because the price per tonne is less than ATC.

B) shut down because the firm is incurring economic losses.

C) maintain production at the current level.

D) increase output because MR is greater than AVC.

E) Not possible to determine because the price of the product is not known.

65) Suppose ABC Corp. is a firm producing newsprint in a perfectly competitive industry. We have the following information about the firm’s production:

A) maximizing; $10 500

B) maximizing; -$10 500

C) not maximizing; -$10 500

D) not maximizing; -$9000

E) maximizing; $9000

66) Refer to Figure 9-1.  The diagram shows cost curves for a perfectly competitive firm. If the market price is P1, the profit-maximizing firm in the short run should

A) produce output A.

B) produce output B.

C) produce output C.

D) produce output D or shut down as it doesn’t really matter which.

E) definitely shut down.

67) Refer to Figure 9-1.  The diagram shows cost curves for a perfectly competitive firm. If the market price is P2, the profit-maximizing firm in the short run should

A) produce output B.

B) produce output C.

C) produce output D.

D) produce output E.

E) shut down, as it is incurring losses.

68) Refer to Figure 9-1.  The diagram shows cost curves for a perfectly competitive firm. If the market price is P3, the profit-maximizing firm in the short run should

A) produce output A.

B) produce output F or shut down, as it doesn’t matter which.

C) produce output D.

D) shut down because more profits could be earned in another industry.

E) produce output F.

69) Refer to Figure 9-1.  The diagram shows cost curves for a perfectly competitive firm. If the market price is P4, the profit-maximizing firm in the short run should produce output

A) C.

B) F.

C) G.

D) H.

E) I.

70) Refer to Figure 9-1.  The diagram shows cost curves for a perfectly competitive firm. The firm’s short-run supply curve starts at output ________ and rises along the marginal cost (MC) curve.

A) D

B) E

C) F

D) G

E) H