Question :
71.Profit-maximizingfirmsinacompetitivemarketproduceanoutputlevelwhere
a.marginalcostequalsmarginalrevenue.
b.marginalcostequalsaveragetotalcost.
c.marginalrevenueisincreasi : 1261523
71.Profit-maximizingfirmsinacompetitivemarketproduceanoutputlevelwhere
a.marginalcostequalsmarginalrevenue.
b.marginalcostequalsaveragetotalcost.
c.marginalrevenueisincreasing.
d.priceislessthanmarginalrevenue.
72.Aprofit-maximizingfirminacompetitivemarketwillalwaysmakemarginaladjustmentstoproductionaslongas
a.averagerevenueisgreaterthanaveragetotalcost.
b.averagerevenueisequaltomarginalcost.
c.marginalcostisgreaterthanaveragetotalcost.
d.priceisaboveorbelowmarginalcost.
73.Whenpriceisgreaterthanmarginalcostforafirminacompetitivemarket,
a.marginalcostmustbefalling.
b.thefirmmustbeminimizingitslosses.
c.thereareopportunitiestoincreaseprofitbyincreasingproduction.
d.thefirmshoulddecreaseoutputtomaximizeprofit.
74.Profit-maximizingfirmsenteracompetitivemarketwhenexistingfirmsinthatmarkethave
a.totalrevenuesthatexceedfixedcosts.
b.totalrevenuesthatexceedtotalvariablecosts.
c.averagetotalcoststhatexceedaveragerevenue.
d.averagetotalcostslessthanmarketprice.
75.Ifaprofit-maximizingfirminacompetitivemarketdiscoversthat,atitscurrentlevelofproduction,priceisgreaterthanmarginalcost,itshould
a.shutdown.
b.reduceitsoutputbutcontinueoperating.
c.continuetoproduceatthecurrentlevels.
d.increaseitsoutput.
76.Foranygivenprice,afirminacompetitivemarketwillmaximizeprofitbyselectingthelevelofoutputatwhichpriceintersectsthe
a.averagetotalcostcurve.
b.averagevariablecostcurve.
c.marginalcostcurve.
d.marginalrevenuecurve.
77.Bycomparingmarginalrevenueandmarginalcost,afirminacompetitivemarketisabletoadjustproductiontothelevelthatachievesitsobjective,whichweassumetobe
a.maximizingtotalrevenue.
b.maximizingprofit.
c.minimizingvariablecost.
d.minimizingaveragetotalcost.
78.Aprofit-maximizingfirminacompetitivemarketiscurrentlyproducing200unitsofoutput.Ithasaveragerevenueof$9andaveragetotalcostof$7.Itfollowsthatthefirm’s
a.averagetotalcostcurveintersectsthemarginalcostcurveatanoutputleveloflessthan200units.
b.averagevariablecostcurveintersectsthemarginalcostcurveatanoutputleveloflessthan200units.
c.profitis$400.
d.Alloftheabovearecorrect.
79.Ifacompetitivefirmiscurrentlyproducingalevelofoutputatwhichprofitisnotmaximized,thenitmustbetruethat
a.marginalrevenueexceedsmarginalcost.
b.marginalcostexceedsmarginalrevenue.
c.totalcostexceedstotalrevenue.
d.Noneoftheaboveiscorrect.
80.Susanquitherjobasateacher,whichpaidher$36,000peryear,inordertostartherowncateringbusiness.Shespent$12,000ofhersavings,whichhadbeenearning10percentinterestperyear,onequipmentforherbusiness.Shealsoborrowed$12,000fromherbankat10percentinterest,whichshealsospentonequipment.Forthepastseveralmonthsshehasspent$1,000permonthoningredientsandothervariablecosts.Alsoforthepastseveralmonthsshehasearned$4,500inmonthlyrevenue.Intheshortrun,Susanshould
a.shutdownherbusiness,andinthelongrunsheshouldexittheindustry.
b.continuetooperateherbusiness,butinthelongrunsheshouldexittheindustry.
c.continuetooperateherbusiness,butinthelongrunshewillprobablyfacecompetitionfromnewlyenteringfirms.
d.continuetooperateherbusiness,andsheisalsoinlong-runequilibrium.