Question :
91) Consider a perfectly competitive firm in the following position: : 1384229
91) Consider a perfectly competitive firm in the following position: output = 4000 units, market price = $1, fixed costs = $2000, variable costs = $1000, and marginal cost = $1.10. To maximize profits the firm should
A) reduce its output.
B) expand its output.
C) shut down.
D) increase the market price.
E) not change its output.
92) A perfectly competitive firm is currently producing an output level where price is $10.00, average variable cost is $6.00, average total cost is $10.00, and marginal cost is $8.00. In order to maximize profits, this firm should
A) shut down.
B) decrease its output.
C) increase its output.
D) increase the market price.
E) not change its output — this firm is at its profit-maximizing position.
93) Refer to Figure 9-2. If the current market price is $6, the profit-maximizing output for this firm is
A) 100 units.
B) 200 units.
C) 300 units.
D) 400 units.
E) 500 units.
94) Refer to Figure 9-2. If the price is $6 and the firm is producing at its profit-maximizing output, then total costs for the firm are
A) $100.
B) $300.
C) $1600.
D) $2400.
E) $3500.
95) Refer to Figure 9-2. If the market price is $1, the firm will produce ________ units of output in the short run.
A) 0
B) 100
C) 200
D) 300
E) 400
96) Refer to Figure 9-2. If the market price is $2, the firm will
A) shut down and make zero profit.
B) shut down and suffer a loss equal to its fixed cost.
C) continue operating in the short run and suffer a loss that is less than its fixed cost.
D) produce 300 units and make a loss equal to total variable cost.
E) produce 200 units and make a loss equal to its total fixed cost.
97) Consider a perfectly competitive firm that is producing a level of output such that price equals average total cost and average total cost is less than marginal cost. In order to maximize its profits, the firm should
A) reduce output.
B) expand output.
C) shut down.
D) increase the market price.
E) not change output.
98) A perfectly competitive firm facing a price of $4.00 is currently producing an output level where average variable cost is $2.00, average total cost is $4.00, and marginal cost is $3.00. In order to maximize profits, this firm should
A) shut down.
B) decrease output.
C) increase output.
D) increase the market price.
E) not change output. This firm is at its profit-maximizing position.
99) Refer to Figure 9-3. Firms A and B are in the same industry. Choose the statement that best describes the situation facing the two firms.
A) Firm A is suffering losses and will be shut down immediately; Firm B will be shut down if the price falls any further.
B) Firm A is making losses but remains producing as long as price falls no further; Firm B is producing at lower cost and is earning economic profits.
C) Firm A and Firm B are both earning positive economic profits; new firms will likely enter the industry.
D) Firm A and Firm B are both suffering economic losses and will soon exit the industry.
100) Refer to Figure 9-3. If Firm B is producing at output level q2, and selling its output at p0, then Firm B should
A) remain at this output level because profits are maximized when SRAVC is at its minimum.
B) expand output to q1 because profits are maximized when SRATC is at its minimum.
C) shut down because at this price and output level the firm is suffering losses.
D) expand output to q0 so that profits will be maximized.
