Econ quiz 5

A profit-maximizing firm will shut down in the short run when

Price < average variable cost

Which of the following statements is correct regarding a firms decisionmaking?

The decision to shut down is a short-run decision, whereas the decision to exit is a long-run decision.

Which of the following is not a characteristic of perfect competition?

brand name advertising

If Harry's Blueberries, a perfectly competitive firm, shuts down in the short run, Harry must pay

only the fixed costs

Economic theory assumes that the goal of firms is to maximize

profit

If a firm in a competitive market increased its output by 20 percent, the price of its output is likely to

remain unchanged

The short-run supply curve for a purely competitive firm is

the segment of the MC curve lying about the AVC curve

Total profit for a firm is calculated as

total revenue minus total cost

At the profit-maximizing output level, the firm represented in the graph above experiences

a loss of $3,200

Which of the following firms is most likely to be perfectly competitive firm?

a soybean farmer

In a competitive market, no single producer can influence the market price because

many other sellers are offering a product that is essentially identical

What is the marginal cost of the 8th unit?

$120

What is the marginal revenue from selling the 3rd unit?

$120

What is Soper's Port Vineyard's economic profit at their profit maximizing point?

$278

Which point in Exhibit 0121 indicated the quantity at which this firm will maximize profit?

Point C

In the graph above, total cost at the profit-maximizing output level equals

$4,800

In the graph above, price equals

$40

In the graph above, total revenue at the profit maximizing output level equals

$8,000

What is the total revenue from selling 7 units if the price is $210?

$840

At what quantity level(s) does the firm in Exhibit 0121 break even?

B and D

At the profit maximizing level of output

Marginal revenue = marginal cost.

A profit maximizing firm that is showing losses (negative profit) faces which of the following conditions?

P < ATC

The accountants hired by Davis Golf Course have determined total fixed cost to be $75,000, total variable cost to be $130,000, and total revenue to be $145,000. Because of this information, in the short run, Davis Golf Course should

decide to stay open because shutting down would be more expensive

The demand curve in a perfectly competitive industry (market) is ________ while the demand curve to a single firm in that industry is _______

downsloping, perfectly elastic

Firms in perfect competition are price takers because

each firm is too small compared to the market to be able to affect price

At Paula's Pizza, the marginal revenue of the last pizza produced is $12. The marginal cost of the last pizza produced is $10. In order profits, Paula should:

increase output