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