Question : Figure 13-13 35) Refer to Figure 13-13.  What the profit maximizing : 1387839

Figure 13-13

35) Refer to Figure 13-13.  What is the profit maximizing output level?

A) Q1 units

B) Q2 units

C) Q3 units

D) Q4 units

36) Refer to Figure 13-13. What is the output price?

A) P4

B) P3

C) P2

D) P1

37) Refer to Figure 13-13.  What is the area that represents the firm’s profit?

A) profit = 0

B) P4edP2

C) P4eaP1

D) P3baP2

38) Refer to Figure 13-13.  Economies of scale are exhausted at which output level?

A) Q1 units

B) Q2 units

C) Q3 units

D) more than Q1 units

39) Refer to Figure 13-13. If the diagram represents a typical firm in the market, what is likely to happen in the long run?

A) Some firms will exit the market causing the demand to increase for firms remaining in the market.

B) New firms will enter the market causing the demand to decrease for existing firms. 

C) Inefficient firms will exit the market, and new cost-efficient firms will enter the market.

D) Competition will be intensified as firms strive to make long-run profits.

40) Refer to Figure 13-13.  If the diagram represents a typical firm in the market, what is likely to happen to its average cost of production in the long run?

A) It will probably fall since the firm must be cost efficient to remain competitive.

B) It will probably fall since the firm will be selling less than its current amount.

C) It will probably rise since the firm will be producing less than its current amount.

D) It will probably rise since its long-run demand is likely to be higher.

Figure 13-14

Figure 13-14 illustrates a monopolistically competitive firm.

41) Refer to Figure 13-14.  Which of the following statements describes the firm depicted in the diagram?

A) The firm is making no economic profit and will exit the industry.

B) The firm is suffering an economic loss by producing at Q0 but will break even it increases its output to Q1.

C) The firm achieves productive efficiency by producing at Q0.

D) The firm is in long-run equilibrium and is breaking even.

42) Refer to Figure 13-14.  It is possible to lower the average cost of production by expanding output beyond Q0 to Q1. Why wouldn’t a firm expand its output to Q1?

A) The firm wants to maximize accounting profit rather than economic profit.

B) The firm would suffer an economic loss at Q1 while it would break even at Q0.

C) The firm’s marginal revenue would be negative at Q1.

D) Demand is not sufficient for consumers to buy Q1.

43) Which of the following is true for a monopolistically competitive firm in long-run equilibrium?

A) P = ATC and MR = MC.

B) P = ATC and P = MC.

C) P > ATC and P > MR.

D) P > MR and MC = ATC.

44) Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run?

A) The firm’s demand curve will shift to the right if it stays in business in the long run.

B) The firm will exit the industry if it continues to suffer economic losses.

C) The firm will break even if it stays in business in the long run.

D) In the long run, the firm will be able to charge a price that is greater than its average total cost.