Question : Figure 12-2 19) Refer to Figure 12-2.  What the amount of : 1387785

Figure 12-2

19) Refer to Figure 12-2.  What is the amount of profit if the firm produces Q2 units?

A) It is equal to the vertical distance c to g.

B) It is equal to the vertical distance c to Q2.

C) It is equal to the vertical distance g to Q2.

D) It is equal to the vertical distance c to g multiplied by Q2 units.

20) Refer to Figure 12-2.  Suppose the firm is currently producing Q2 units. What happens if it expands output to Q3 units?

A) Its profit increases by the size of the vertical distance df.

B) It makes less profit.

C) It incurs a loss.

D) It will be moving toward its profit maximizing output.

21) Refer to Figure 12-2. The firm breaks even at an output level of

A) Q1 units.

B) Q2 units.

C) Q3 units.

D) Q4 units.

22) Refer to Figure 12-2. What happens if the firm produces more than Q4 units?

A) Its profit increases.

B) It makes a loss.

C) Its total revenue is increasing faster than its total cost.

D) It could make a profit or a loss depending on what happens to demand.

23) Refer to Figure 12-2. Why is the total revenue curve a ray from the origin?

A) because revenue increases at an increasing rate

B) because revenue increases at a decreasing rate

C) because the firm can sell its product at a constant price

D) because the firm must lower its price to sell more

24) In a graph with output on the horizontal axis and total revenue on the vertical axis, what is the shape of the total revenue curve for a perfectly competitive seller?

A) U-shaped

B) inverted U-shaped

C) a horizontal line

D) a ray from the origin

25) For a perfectly competitive firm, which of the following is not true at profit maximization?

A) Market price is greater than marginal cost.

B) Marginal revenue equals marginal cost.

C) Total revenue minus total cost is maximized.

D) Price equals marginal cost.

26) Assume that price is greater than average variable cost. If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54, then to maximize profits the firm should

A) continue producing at the current output.

B) produce a larger level of output.

C) produce a smaller level of output.

D) There is not enough information given to answer the question.

27) To maximize profit, a perfectly competitive firm

A) should sell the quantity of output determined by the interaction between industry demand and supply.

B) should sell the quantity of output that results in a value for total revenue that is equal to total cost.

C) should produce the quantity of output that results in the greatest difference between total revenue and total cost.

D) should produce the quantity of output that results in the greatest difference between marginal revenue and marginal cost.

28) For a perfectly competitive firm, average revenue is equal to

A) marginal cost.

B) the market price.

C) total revenue.

D) average fixed cost.