Question :
221.Inacompetitivemarketthecurrentpriceis$5.ThetypicalfirminthemarkethasATC=$5.50andAVC=$4.50.
a.Intheshortrunfirmswillshutdown,andinthelongrunfirmswillleavethemarket.
b.Intheshortrunfirms : 1261539
221.Inacompetitivemarketthecurrentpriceis$5.ThetypicalfirminthemarkethasATC=$5.50andAVC=$4.50.
a.Intheshortrunfirmswillshutdown,andinthelongrunfirmswillleavethemarket.
b.Intheshortrunfirmswillcontinuetooperate,butinthelongrunfirmswillleavethemarket.
c.Newfirmswilllikelyenterthismarkettocaptureanyremainingeconomicprofits.
d.Thefirmwillearnzeroprofitsinboththeshortrunandlongrun.
222.Inacompetitivemarketthecurrentpriceis$5.ThetypicalfirminthemarkethasATC=$5.00andAVC=$4.50.
a.Intheshortrunfirmswillshutdown,andinthelongrunfirmswillleavethemarket.
b.Intheshortrunfirmswillcontinuetooperate,butinthelongrunfirmswillleavethemarket.
c.Newfirmswilllikelyenterthismarkettocaptureanyremainingeconomicprofits.
d.Thefirmwillearnzeroprofitsinboththeshortrunandlongrun.
223.Inacompetitivemarketthecurrentpriceis$6.ThetypicalfirminthemarkethasATC=$5.00andAVC=$4.50.
a.Intheshortrunfirmswillshutdown,andinthelongrunfirmswillleavethemarket.
b.Intheshortrunfirmswillcontinuetooperate,butinthelongrunfirmswillleavethemarket.
c.Newfirmswilllikelyenterthismarkettocapturesomeoftheeconomicprofits.
d.Thefirmwillearnzeroprofitsinboththeshortrunandlongrun.
224.Jose’srestaurantoperatesinaperfectlycompetitivemarket.Atthepointwheremarginalcostequalsmarginalrevenue,ATC=$20,AVC=$15,andthepriceperunitis$10.Inthissituation,
a.Jose’srestaurantisearningapositiveeconomicprofit.
b.Jose’srestaurantshouldshutdownimmediately.
c.Jose’srestaurantislosingmoneyintheshortrunbutshouldcontinuetooperate.
d.themarketpricewillriseintheshortruntoincreaseprofits.
225.Thetermshutdown
a.andthetermexitbothrefertoshort-rundecisionsthatafirmmightmake.
b.andthetermexitbothrefertolong-rundecisionsthatafirmmightmake.
c.referstoashort-rundecisionthatafirmmightmake,whereasthetermexitreferstoalong-rundecisionthatafirmmightmake.
d.referstoalong-rundecisionthatafirmmightmake,whereasthetermexitreferstoashort-rundecisionthatafirmmightmake.
226.Foraparticularcompetitivefirm,theminimumvalueofaveragevariablecost(AVC)is$12andisreachedwhen200unitsofoutputareproduced.Forthesamefirm,theminimumvalueofaveragetotalcost(ATC)is$15andisreachedwhen230unitsofoutputareproduced.Whichofthefollowingstatementsiscorrect?
a.Intheshortrun,thefirmwillshutdownifthepriceofitsproductis$11.
b.In thelongrun,thefirmwill shutdownifthepriceof itsproductis$14.
c.Ifthepriceofitsproductis$12,thenthefirm’slossifitproduces200unitsofoutputisthesameasitslossif
d.Alloftheabovearecorrect.
227.Foraparticularcompetitivefirm,theminimumvalueofaveragevariablecost(AVC)is$12andisreachedwhen200unitsofoutputareproduced.Forthesamefirm,theminimumvalueofaveragetotalcost(ATC)is$15andisreachedwhen230unitsofoutputareproduced.Whichofthefollowingstatementsiscorrect?
a.Intheshortrun,thefirmwillshutdownifthepriceofitsproductis$14.
b.In thelongrun,thefirmwill shutdownifthepriceof itsproductis$11.
c.Forthisfirm,theminimumvalueofvariablecost(VC)is$2,400.
d.Ifthefirm’sfixedcost(FC)amountsto$500,thenthefirmcannotearnapositiveprofitunlessthepriceofitsproductexceeds$16.
228.Whenfixedcostsareignoredbecausetheyareirrelevanttoabusiness’sproductiondecision,theyarecalled
a.explicitcosts.
b.implicitcosts.
c.sunkcosts.
d.opportunitycosts.
229.Whenaprofit-maximizingfirm’sfixedcostsareconsideredsunkintheshortrun,thenthefirm
a.cansetpriceabovemarginalcost.
b.mustsetpricebelowaveragetotalcost.
c.willnevershowlosses.
d.cansafelyignorefixedcostswhendecidinghowmuchoutputtoproduce.
230.Whichofthesetypesofcostscanbeignoredwhenanindividualorafirmismakingdecisions?
a.sunkcosts
b.marginalcosts
c.variablecosts
d.opportunitycosts