Question : Figure 13-6 27) Refer to Figure 13-6. Suppose Dell : 1387829

 

Figure 13-6

 

 

27) Refer to Figure 13-6. Suppose Dell finds the relationship between the average total cost of producing notebook computers and the quantity of notebook computers produced is as shown by Figure 13-2. Dell will maximize profits if it produces ________ notebook computers per month.

A) 100,000

B) 200,000

C) 300,000

D) Not enough information is given to determine the profit-maximizing quantity.

 

 

28) After selling 1,000 three-ring binders, Tony DiFulvio realizes that the marginal revenue from selling the last binder was less than the marginal cost. From this we can conclude that

A) Tony’s business earns a short-run economic profit.

B) Tony should shut down his business temporarily.

C) Tony’s profit fell after selling his 1,000th three-ring binder.

D) Tony’s profit would be greater if he sold an additional three-ring binder.

 

Table 13-4

 

Quantity Sold

Price

Total Revenue

Marginal Revenue

Total

Cost

Marginal Cost

Profit

0

$10

$0

—–

$2

—–

-$2

1

  9

9

 

8

 

 

2

  8

16

 

13

 

 

3

  7

21

 

17

 

 

4

  6

24

 

20

 

 

5

  5

25

 

22

 

 

6

  4

24

 

26

 

 

 

Table 13-4 lists estimated revenues and costs (per week) for plastic vials (100 vials per box) for the Victoria Biological Supplies Company. Victoria sells plastic vials to university and private research laboratories.

 

29) Refer to Table 13-4.  Based on the data in the table, which of the following statements is true?

A) The table summarizes Victoria’s short-run, rather than long-run, market for plastic vials.

B) Victoria could be either a monopolistically competitive or a perfectly competitive firm.

C) Victoria should shut down temporarily.

D) Victoria should advertise more in order to increase the demand for plastic vials.

 

 

30) Refer to Table 13-4.  Victoria’s profit-maximizing quantity sold (Q) and price (P) are

A) Q = 3; P = $7.

B) Q = 4; P = $6.

C) Q = 5; P = $5.

D) Q = 6; P = $4.

 

31) Refer to Table 13-4.  Victoria’s profit-maximizing output is where

A) total profit equals $3.

B) marginal revenue and marginal cost both equal $4.

C) marginal revenue and marginal cost both equal $3.

D) marginal cost is at its minimum value.

 

 

32) Refer to Table 13-4.  At Victoria’s profit-maximizing output,

A) profit equals $2.

B) total revenue equals $24 and total cost equals $20.

C) total revenue equals $25 and total cost equals $22.

D) total revenue equals $21 and total cost equals $17.

 

 

33) The profit-maximizing rule for a monopolistically competitive firm is to select the quantity at which

A) marginal revenue equals marginal cost.

B) average revenue exceeds marginal cost by the greatest amount.

C) price equals marginal cost.

D) average revenue equals average total cost.

 

Figure 13-7

 

 

Figure 13-7 shows short-run cost and demand curves for a monopolistically competitive firm in the footwear market.

 

34) Refer to Figure 13-7.  Which of the following statements describes the best course of action for the firm depicted in the diagram?

A) The firm should exit the industry because its price is less than its average total cost.

B) The firm should minimize its losses by producing Qy units and charging a price of P0.

C) The firm should minimize its losses by producing Qy units and charging a price of P2.

D) The firm should minimize its losses by producing Qy units and charging a price of P1.

 

 

35) Refer to Figure 13-7.  Which of the following is the area that represents the profit or loss experienced by the firm?

A) a loss represented by the rectangle P2uvP1

B) a loss represented by the rectangle P2uwP0

C) a loss represented by the rectangle P1vwP0

D) an accounting profit equal to P1vwP0