Question : 81) Suppose that in a perfectly competitive industry, the market : 1384228

81) Suppose that in a perfectly competitive industry, the market price of the product is $6. A firm is producing the output level at which average total cost equals marginal cost, both of which are $8. Average variable cost is $4. To maximize its profits in the short run, the firm should

A) reduce its output.

B) expand its output.

C) leave its output unchanged.

D) shut down.

E) There is insufficient information to know.

82) Suppose that in a perfectly competitive industry, the market price of the product is $27.  A firm is producing the output level at which average total cost equals marginal cost, both of which are $25.  Average variable cost is $23.  To maximize profits in the short run, the firm should

A) reduce its output.

B) increase its output.

C) leave its output unchanged.

D) shut down.

E) change the price of the product.

83) Suppose that in a perfectly competitive industry, the market price for the product is $130.  A firm is producing the output level at which average total cost equals marginal cost, both of which are $138.  Average variable cost is $132.  To maximize profits in the short run, the firm should

A) reduce its output.

B) expand its output.

C) leave its output unchanged.

D) shut down.

E) change the price of the product.

84) A price-taking firm in the short run should not produce any level of output unless

A) marginal revenue exceeds marginal cost.

B) marginal revenue equals average total cost.

C) average revenue equals or exceeds average variable cost.

D) average revenue equals or exceeds average total cost.

E) it is earning positive profits.

85) Suppose a perfectly competitive firm is producing a level of output for which 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 its output.

B) expand its output.

C) shut down.

D) increase the market price.

E) not change its output.

86) Which of the following statements about a firm in a perfectly competitive industry is true?

A) The firm can improve its competitive position and sell more output by advertising its product.

B) The firm maximizes its profit by producing where P = ATC.

C) The firm maximizes its profit by producing where P = AVC.

D) The firm will not produce at all if P < ATC. E) The firm will not produce at all if P < the minimum of AVC. 87) Suppose a perfectly competitive firm is producing a level of output such that its average revenue is less than its lowest average variable cost. The firm should A) reduce its output. B) expand its output. C) shut down. D) increase the market price. E) not change its output. 88) Suppose that in a perfectly competitive industry, the market price of the product is $12. Firm A is producing the output level at which average total cost equals marginal cost, both of which are $10. To maximize its profits, Firm A should A) reduce its output. B) expand its output. C) leave its output unchanged. D) increase its advertising. E) change the price of the product. 89) Consider a perfectly competitive firm in the following position: output = 4000 units, market price = $1, fixed costs = $2000, variable costs = $2000, and marginal cost = $1. 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. 90) Consider a perfectly competitive firm in the following position: output = 4000, market price = $1, fixed costs = $2000, variable costs = $4500, and marginal cost = $1. 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.