Econ Final

Refer to Scenario 9.1. Amy's total fixed costs equal

$10,000

Perfectly competitive firms

All of the above are correct.

The Taste Freeze Ice Cream Company is a perfectly competitive firm producing where MR = MC. The current market price of an ice cream sandwich is $5.00. Taste Freeze sells 200 ice cream sandwiches. Its AVC is $8.00 and its AFC is $3.00. What should Taste Freeze do?

Shut down and produce zero sandwiches because price is less than AVC.

Assume Dell Computer Company operates in a perfectly competitive market producing 5,000 computers per day. At this output level, price EXCEEDS this firm's marginal cost. To maximize profits, Dell should

increase their output.

If TR > TC, a firm would ________ in the short run and ________ in the long run.

operate; expand

Total cost is calculated as

the sum of total fixed cost and total variable cost.

Billy Bob's Fertilizer Engineers, a perfectly competitive firm, is incurring a loss, but the price is still above minimum average variable cost. Then in the short run this firm should ________, and in the long run, if there is no change in economic conditions, this firm should ________.

produce where MR = MC; exit the industry

Refer to Scenario 9.1. Amy's profit is

$20,000

Refer to Figure 8.3. The marginal cost of the 10th basketball is

$2

Refer to Figure 8.8. If this farmer is producing the profit-maximizing level of output, her profit is

$3,000

Assume Dell Computer Company operates in a perfectly competitive market producing 5,000 computers per day. At this output level, price EQUALS this firm's marginal cost. To maximize profits, Dell should

make no adjustments as they are already maximizing their profits.

If an individual perfectly competitive firm charges a price below the industry equilibrium price, it will

sell all that it produces but gain less revenue than competing firms will.

If a firm is producing where MR > MC

the revenue gained by producing one more unit of output exceeds the cost incurred by doing so.

Profit-maximizing firms want to maximize the difference between

total revenue and total cost.

Refer to Scenario 9.1. Amy's total costs equal

$40,000

Refer to Figure 8.3. If the total fixed cost is $50, then average total cost of producing 10 basketballs is

$8

Refer to Figure 8.8. What is the total cost of producing the profit maximizing level of output?

$9,000

Refer to Figure 8.8. This farmer's profit-maximizing level of output is ________ units of output.

1,000

Refer to Figure 8.8. If the market price of soybeans falls to $8, then to maximize profits this farmer should produce

700 bushels of soybeans.

The Taste Freeze Ice Cream Company is a perfectly competitive firm producing where MR = MC. The current market price of an ice cream sandwich is $5.00. Taste Freeze sells 200 ice cream sandwiches. Its AVC is $4.00 and its AFC is $3.00. What should Taste Freeze do?

Continue to produce because price exceeds AVC.