micro final

In the short run, a firm should shut down its operations if:

if losses are greater than TFC at the MR = MC point

Suppose that, in the long run, the price of feature films rise as the movie product industry expands. We can conclude that movie production is an:

increasing cost industry

Consider a firm with the following cost and revenue information: ATC = $8, AVC = $7, and MR = MC = $6. If the firm produces Q = 60 in the short run, it:

is making a mistake and should shutdown

Imagine you own a machine that produces perfectly authentic and legal $100 bills. You would use this machine until:

the marginal cost was at $100

The price taker firm should discontinue production immediately if:

the market price is less an the firms average total costs

Which of the following is true of a perfectly competitive market?

*If economic profits are earned, prices will fall over time. *In long-run equilibrium P=MR=SRMC=SRATC=LRAC *A constant cost industry exists when the entry of new firms has no effect on their cost curves.

A firm operating in a perfectly competitive market is a price taker because:

*no firm has a significant market share *no firm's product is perceived as different *setting a higher price than the going price result in zeros sales

When choosing the production level for tomorrow you find that at an output of 100 units, the total variable costs are $20,000 and the average fixed costs is only $50. If the market price is $200 you should:

*shut down *produce where MC=MR

Which of the following correctly explains why sellers in a perfectly competitive markets are price takers?

There are many sellers, and so the market process generates an equilibrium price that cannot be influenced by any one seller. The they have no choice but to take the price generated by the market process.

What is a characteristic of a perfectly competitive market?

There is free entry and exit from the market.

The marginal revenue of a price taker is:

equal to price.

Assume that a firm's marginal revenue just barely exceeds marginal costs. Under these conditions a firm should:

expand output

If the price of a product falls below average variable cost in the short run, the firm:

experiences a loss

A perfectly competitive industry must have a perfectly elastic long-run supply curve.

false

Assume the short run average total cost of a perfectly competitive industry decreases as the output of the industry expands. In the long run, the industry supply curve will:

have a negative slope

The demand for a product of a competitive price takers firm is:

perfectly elastic