MICRO

Which of the following statements concerning the relationships between total product (TP), average product (AP), and marginal product (MP) is not correct? a) AP continues to rise so long as TP is rising b) AP reached it's maximum before TP teaches it's maximum c) TP reaches a maximum when the MP of the variable input becomes 0 d) MP cuts AP at the maximum AP

AP continues to rise so long as TP is rising

A supply curve is linear with a slope of 3. If, at a price of $21, there are 7 units demanded in the marketplace, then the elasticity of supply is

unitary elasticity - A supply curve coming out of the origin will have unitary elasticity.

The long-run supply curve for a purely competitive increasing-cost industry will be

upsloping

A purely competitive firm's short-run supply curve is:

upsloping and = to the portion of the MC curve that lies above the AVC curve.

TP (total product)

the total volume or amount of final output produced by a firm using given inputs in a given period of time.

Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were:

$200,000 and its economic profits were zero.

Pure (Perfect) Competition -# of sellers - product type -conditions of entry

- Very Large - Standard: Identical, Perfect Substitutions - Free

Oligopoly -# of sellers - product type -conditions of entry

-A few - Standard/Differentiated -Very Difficult

Monopoly -# of sellers - product type -conditions of entry

-One -Unique -Blocked

Which statement is true? a. Short-run cost assumes a fixed capital size, while long-run cost includes all possible capital levels in determining cost. b. Short-run total cost can never be less than long-run total cost. c. Long-run marginal cost never intersects long-run average cost as long as increasing returns to scale are present. d. All the above are true. e. None of the above are true.

All of the above are true - Long-run costs are always the lowest cost that the best-sized short-run plant for each output can produce.

Which statement is true? a. An ATC curve includes both implicit and explicit costs. b. Norman profit is considered a cost of doing business. c. The owner's time is part of normal profit in a business. d. All of the above are true. e. None of the about are true.

All of the above are true -The ATC includes all relevant opportunity costs both implicit and explicit which includes normal profit.

Total Revenue=

Price x Quantity -price of the product x quantity of output sold

Skippy

Such a good boy

ATC (average total cost) Equation

TC/Q

In a Monopoly demand curve, elasticity is at 1, meaning

Total Revenue is at it's highest

Stage II: Decreasing Marginal Returns

When MP begins to fall, TP is increasing at a decreasing rate. The result of limited fixed resources.

A positively sloped isoquant would imply that

additional capital would be in the way and hurt worker productivity

Implicit Cost Examples

-A business owner who chooses to work for her company without drawing a salary is forgoing the opportunity to earn a fair wage for her business skills and talents. -Building a factory on already owned land -comes from a use of an asset -when an owner allocates time toward the maintenance of a company, rather than using those hours elsewhere.

ATC behavior

-ATC curves start off high, bc at low levels of output total costs are dominated by the fixed cost - ATC then declines, as the fixed costs are spread over an increasing quantity of output. -as output expands still further, the ATC begins to rise. At the right side of the ATC curve, total costs begin rising more rapidly as diminishing returns kick in.

Monopolistic Competition -# of sellers - product type -conditions of entry

-Large -Differentiated: similar, but not identical (close subs) -Relatively Easy

Properties of Isoquant Curve

-Slopes downward from left-right -Slope represents MRTS -Curved, Convex

Why is TC, TVC, and TFC on a different graph then MC, ATC, and AVC?

-TC, TVC, and TFC each reflect different aspects of the cost of production over the entire quantity of output being produced. These costs are measured in dollars. In contrast,MC, ATC and AVC are costs per unit. -$ cost vs $ cost per unit of output

MC vs. ATC (basketball example)

-The MC line intersects the ATC line exactly at the bottom of the ATC curve -When MC is below ATC, ATC will be falling, and when MC is above ATC, ATC will be rising. -think basketball example from class -coverse

In short-run production, how are MP and AP related?

-When AP is rising, MP lies above AP -When AP is declining, MP lies below AP -At the maximum of AP, MP and AP equal each other.

In short-run production, how are TP and MP related?

-When MP increases, the TP is also increasing at an increasing rate -When MP declines but remains positive, TP is increasing but at a decreasing rate -When the MP is declining and negative,TP declines. -When the MP becomes zero, TP reaches its maximum

AVC behavior

-any level of output, the AVC curve will always lie below the curve for ATC

TVC behavior

-increases as output increases -slopes up at an accelerating rate, reflecting the law of diminishing marginal returns.

Fixed Input

-inputs whose quantity is constant for some period of time or constant for short run production function. -includes land and machinery, it may also include certain type of labor( contract base labor).

Break-Even point occurs at

-intersection of TC and TR -seen as normal profit -only 2 break-even points on each graph, any point in between is economic profits

TVC (total variable costs)

-the cost paid to the variable input. Inputs include (traditionally)labor, capital, materials, power, land, buildings. -increases as output increases -costs that vary directly with the level of output

Short Run

-the period of time during which at least one of a firm's inputs is fixed -the period in which a company can increase production by adding more raw materials and more labor but not another factory.

Long Run

-the time period in which all inputs can be varied - the period in which all inputs are variable, including factory space, meaning that there are no fixed factors or constraints preventing an increase in production output.

Explicit Cost Examples

-wages -payments made to purchase raw materials -business rent/mortgage payments -fees related to purchasing manufacturing equipment.

If the average fixed cost is 40 and the average variable cost is 80 for a given output, we then know that average total cost is

120 AFC + AVC = ATC

When a firm replaces human labor with robots that are equally productive a. fixed costs go up and the variable costs go down if the robots are purchased. b. the fixed and variable costs stay the same if robots can be rented by the day at the same rate as labor for the same work performed. c. the marginal costs go down if the robots are purchased. d. All of the above are true e. None of the above is correct because all costs fall when robots are used

All of the above are true -If purchased, robots are part of the fixed capital expenses,and marginal costs fall when labor leaves. If they can be hired like labor they are part of variable cost in the same way that labor is.

Which of the following is not considered production activity? a. your teacher teaching this class b. The Chicago Bulls playing a basketball game c. A car salesman selling a used car d. A boxer knocking out an opponent e. All the above considered production activity

All the above are considered production activity -Any good or service that brings someone utility means productivity has occurred

Which is not a good example of a fixed cost? a.Interest on long-term plant loans b.Property taxes c.Insurance payments d.Electricity and oil payments

Electricity and oil payments -One can always freeze in the dark or at least move in that direction.

I promise. And you know it

Everything will work out

3 phases of AVC curve

Increasing returns to the variable factors, which cause average costs to fall, followed by: Constant returns, followed by: Diminishing returns, which cause costs to rise.

A natural monopoly occurs at the lowest point of

Long-Run Average Cost Curve (LRAC)

In the short run, the individual competitive firm's supply curve is that segment of the:

MC curve lying above the AVC curve

If a purely competitive firm is producing at some level less than the profit-maximizing output, then:

MR exceeds MC

Which of the following is characteristic of a purely competitive seller's demand curve? a.) P and MR are equal at all levels of output b.) P and ATC are equal at all levels of output c.) It is unit elastic at all levels of output d.) P and MC are equal at all levels of output

P and MR are equal at all levels of output

TC (total cost) + equation

TC = TFC + TVC all costs of production: the sum of variable costs and fixed costs

Suppose that, when producing 10 units of output, a firm's AVC is $22, its AFC is $5, and its MC is $30. This firm's:

TC is $270

MC (marginal cost) equation

TC/Q the change in total cost and dividing it by the change in quantity.

AFC (average fixed cost) equation

TFC/Q

AVC (average variable cost) equation

TVC/Q

MP (marginal product)

The additional output produced as a result of employing an additional unit of the variable factor input is called the Marginal Product. Thus, we can say that marginal product is the addition to Total Product when an extra factor input is used. Marginal Product = Change in Output/ Change in Input

Stage III: Negative Marginal Returns

When Marginal Product is negative. Total Product is decreasing.

Stage I: Increasing Marginal Returns

When Marginal Product rises. Total Product increasing at an increasing rate

Producer surplus is a.the amount of revenue received by the producer above the amount that would have been required for her to supply the product in the short run. b.the amount of economic profit that would be present if there were no fixed costs in the production process. c.the difference between the total revenue and the total variable cost of a production process. d.all the above. e.none of the above.

all the above

If the marginal cost is 50 and average total cost is 75, we can be sure that

average total cost is falling -The marginal cost always pulls the average down if it is below the average cost.

Short-run production function cost curve: When output is increasing...

costs increase at a decreasing rate

The demand curve in a purely competitive industry is ______, while the demand curve to a single firm in that industry is ______.

down-sloping; perfectly elastic

The monopoly demand curve is

downward sloping

Marginal Cost: A. equals both average variable cost and average total cost at their respective minimums. B. is the difference between total cost and total variable cost. C. rises for a time, but then begins to decline when diminishing returns set in. D. declines continuously as output increases.7-18

equals both average variable cost and average total cost at their respective minimums.

Economic profits are calculated by subtracting:

explicit and implicit costs from total revenue.

MC behavior

generally upward-sloping, because diminishing marginal returns implies that additional units are more costly to produce

Being a price taker in a market means that the seller

has no choice but to charge the equilibrium price that results from the market supply and demand curves. - If he priced higher he would lose all sales, and a lower price would be stupid because he can sell all he can produce at the market price.

If a firm is producing where its SMC = price and the LMC is less than LAC, then it would do better in the long run by

increasing plant size until LMC and SMC are identical and equal to price. - The firm is on the downward sloping part of the LATC curve and should expand.

Variable Input

inputs whose quantity can vary, even in the short run or for short period of time. Example of these input are labor energy fuel etc.

For a given short-run production function: technology

is considered to be constant for a given production function relationship

Suppose that at 500 units of output marginal revenue is equal to marginal cost. The firm is selling its output at $5 per unit and average total cost at 500 units of output is $6. On the basis of this information we:

cannot determine whether the firm should produce or shut down in the short run.

If accounting profits are positive and economic profits are negative over the long haul, it is proper strategy to

close down the business and shift the resources to more profitable work -Accounting profits themselves do not tell you if you could be doing better.

Which product below best fits the qualities of a perfectly competitive good? a. Apple computer b. Hershey kisses c. comb d. wedding dress

comb - Apple computers, Hershey kisses, and wedding dresses have brand loyalty and product uniqueness that limits the number of substitutes available.

Question 8: If a given input is used in two production processes that exhibit diminishing returns, and it's present distribution between the two processes results in a higher marginal product in the first process, then we know that

more of the input should be transferred from the second process to the first process -Always use inputs so that their marginal product is equal in all processes

If an entrepreneur is minimizing cost for a given output level and the marginal product of labor is 5, the marginal product of capital is 15, and the price of capital is $300, then the price of labor

must be $100 -The ratio of the prices should equal the ratio of the marginal products, which is 1/3.

When economic profit exists for a firm, it is very tenuous because

price will fall because market supply will increase - Supply will increase because profits attract competitors like flies.

Lon-run competitive equilibrium:

results in zero economic profits

If the owner of a service station told a mechanic looking for work that he would not hire another mechanic if the mechanic offered to work for nothing, we can assume that

the average product of mechanics is falling -if the MP (marginal product) is less than 0, the average must be falling

Short-run equilibrium is efficient because at that point

the benefit from the last unit produced is exactly equal to the cost of producing that unit of output

Production Function

the relationship that describes how inputs like capital and labor are transformed into output

At the point of diminishing returns...

the second derivative of the total function is 0 -The second derivative of the total product is the first derivative of marginal product

If, in question 8, the characteristics of diminishing marginal productivity is dropped from the example, then

the second process should be abandoned completely -obliviously, the first process will always be better than the second, so use it always

When an exchange occurs in a marketplace, the total net benefit that results from the transaction is

the sum of the producer surplus and the consumer surplus

Accounting Profit

the total revenues minus explicit costs, including depreciation. -the difference between dollars brought in and dollars paid out.

In a production function with labor and capital where the marginal product of each factor is 0, at the same time it is true that

the two factors are complements in production -They must be perfect complements and production must be occurring at the bend in the L-shaped isoquant.

Accounting Profit Equation

total revenue - explicit costs

Economic Profit Equation

total revenue - explicit costs - implicit costs

Profit Equation

total revenue - total cost

Economic Profit

total revenues - total costs(explicit + implicit costs)

Which of the following is correct? a) When the Marginal Product (MP) is rising , marginal cost (MC) is rising; and when MP is falling, MC is falling b) when MP is rising, MC is constant, and when MP is falling, MC is negative c) when MP is rising, MC is falling, and when MP is falling , MC is rising d) there no relationship between MP and MC

when MP is rising, MC is falling, and when MP is falling , MC is rising

Where is profit maximized on the graph?

where the vertical distance between TR and TC is the greatest

Which of the following is correct? A. When total product is rising, both average product and marginal product must also be rising. B. When marginal product is falling, total product must be falling. C. When marginal product is falling, average product must also be falling. D. Marginal product rises faster than average product and also falls faster than average product.

Marginal product rises faster than average product and also falls faster than average product.

Each point on the long-run average cost curve is a

level of average cost that is the lowest possible average cost for that level of output - All points on the LAC are the lowest cost points possible for that output even though they may not be low points on the short-run cost curve of the plant in use.

The production function Q=3KL with capital fixed at 2 will be _____ and have a slope that is ______ the slope of the same function with a fixed capital stock of 1

linear; three times - In one case the slope is 3, and in the other it is 6

If a new law requires a producer of cigarettes to pay $3 for every pack sold

the AVC of producing cigarettes has gone up - A per unit tax on the producer would be a variable cost only because if no packs are sold there is no tax paid. While taxes are transfer payments from society's point of view,a producer must take them into account as costs in a business model.

If a ray from the origin is tangent to a typical short-run production function, then...

the MP of the variable input is equal to the AP of that input -If the ray is tangent to the production function, then it is a marginal and average line

If an increase in market demand disturbs a long-run equilibrium situation that has a U-shaped LAC, and resources flowing into the industry stay constant in price, then

the long-run supply curve will be horizontal, and more plants will be built at the optimal size to accommodate expansion. - Since the LATC does not change, firms do not expand but more join the market.

Which is true about the output values of a production function? a. They are conceptually flawed and of marginal use because they do not consider raw materials as an input b. They represent only the value added of the two inputs that are represented c. They overlook the role of fixed inputs into production d. They overlook the role of variable inputs into production

They represent only the value added of the two inputs that are represented -Does not mean raw materials are irrelevant, but they come from another production process

AP (average product) Equation

Total Product/ Units of Variable Factor Input

TFC behavior

are constant as output increases, the curve is a horizontal line on the cost graph.

Explicit Costs

are out-of-pocket costs for a firm—for example, payments for wages and salaries, rent, or materials.

Implicit Costs

are the opportunity cost of resources already owned by the firm and used in business—for example, expanding a factory onto land already owned.

In a constant cost industry where the long-run supply curve is horizontal and the LAC curve is U-shaped, an increase in demand will, in the long run,

increase the number of firms in the industry but not the size of existing firms.

Marginal Product: may initially

increase, then diminish, and ultimately become negative

As output increases, total variable cost:

increases at a decreasing rate and then at an increasing rate

The output where diminishing returns to production begin is also the output where

marginal cost is at a minimum

Average fixed cost declines

over the entire output range

The demand curve for a purely competitive firm is:

perfectly elastic

You are literally done in 24 hours

24 FLIPPING HOURS

I get $100 revenue from the sale of my product each day. I rent the factory that I use for $25 a day. The raw materials of my operation cost $50 a day. I do all the work myself. Recently, a competitor offered me $30 a day to work for him. My accounting profit is $_____ and my economic profit is $_____ , so I _____take the job offer if money is my only concern.

25, -5, will -The opportunity cost of the owner is an economic cost of being in business.

Two perfectly competitive firms face the same cost and revenue functions. Which statement is true in this situation in the long run? a. The firm with the biggest markup earns the most profit. b. The firm with the lowest price sells the most. c. Both firms have identical profit in the long run. d. More data is needed before any of the above can be evaluated.

Both firms have identical profit in the long run. - Both firms will need to price the same and in the long run make only normal profit which will be the same for both.

Game of Thrones

DANY TORCHED KINGS LANDING

Which of the following is most likely to be an implicit cost for Company X? a) Forgone rent from the building owned and used by company X b) Rental payments on IBM equitment c) Payments for raw materials purchased from Company X d) Transportation costs paid to a nearby trucking firm

Forgone rent from the building owned and used by company X

Why is Monopoly good?

Good for lower unit costs Ex. PSEG owns 1 large power plant instead of having to run multiple ones

The perfect competition model is characterized by all but which one of the following? a.Intense rivalry among and between existing firms b.A downward sloping market demand curve c.Free information d.A profit maximization goal for each firm

Intense rivalry among and between existing firms -Perfect competition is perfect because it leads to optimal efficiency, not because it promotes rivalry, or describes the real world accurately.

Which of the following statements is not true? a.Labor unions might support a minimum wage law even though their wages are way above the minimum. b.Laborers might favor higher interest rates on capital c.Any firm that knows all its marginal cost points should be able to calculate its ATC from those data if it knows its fixed costs. d.It is inevitably inefficient to keep an old plant producing if its average costs are greater than the marginal costs of a new plant.

It is inevitably inefficient to keep an old plant producing if its average costs are greater than the marginal costs of a new plant. - If the marginal cost of an old plant is less than the marginal cost of a new plant the old plant should be used. This could happen if short run production requirements push a new plant toward too high a capacity.

TC behavior

Its position reflects the amount of fixed costs, and its gradient reflects variable costs.

Which of the following statements is correct? a.) Average total cost is the difference between average variable cost and average fixed cost b.) Marginal measures the cost per unit of output associated with any level of production c.) When marginal product rises, marginal cost must also rise d.) Marginal cost is the price, or cost, of an extra variable input (for example, an additional worker or machine) divided by its marginal product

Marginal cost is the price, or cost, of an extra variable input (for example, an additional worker or machine) divided by its marginal product

Which is a true statement? a. Decreasing returns to scale and diminishing returns to production are two ways of stating the same thing b. Increasing returns to scale is a short-run concept, and diminishing returns to production is a long-run concept c. Constant returns to scale is a short-run concept, and decreasing returns to scale is a long-run concept d. all above are true e. none of the above are true

None of the above are true -Diminishing returns is a short-run concept and returns to scale is a long-run notion

Which statement is necessarily true? a. When firms increase in size they gain more market power and the good qualities of perfect competition are compromised. b. Globalization has led to multinational firms, which have made the perfect competition model less relevant. c. One industry has 100 firms and the other has 200. Both industries have the same sales volume. It is obvious that the industry with 1000 firms fits the perfect completion model best. d. None of the above statements is necessarily true.

None of the above statements is necessarily true. -Market power is determined by market share rather than size of the firm. A large firm in a big global market may have a small portion of the market and little pricing power. The industry with 200 firms could have one firm much bigger than all the rest while the other group of 100 might each have 1% of the market.

Which statement is true of perfect competition? a.Policy that attempts to redistribute income through market intervention will likely fail in the long run. b.There is no incentive to innovate in this market structure because economic profits from innovation get bid away. c.Since economic profits are zero in the long run, once the long run is reached no changes will occur in the industry. d.All the above statements are true. e.None of the above statements are true.

Policy that attempts to redistribute income through market intervention will likely fail in the long run. - If the labor market is competitive, people will get what they earn in the long run.

What are the three stages in the short-run production function?

Stage I: Increasing Marginal Returns Stage II: Decreasing Marginal Returns Stage III: Negative Marginal Returns

In the 19th century Thomas Malthus declared that the world was headed for perpetual war, pestilence and famine. He felt the rate of population growth would exceed production possibilities. Which of the following has offset or dramatically delayed his prediction? a. Technological change increased production substantially even though short-run diminishing returns was operative. b. Diminishing returns have been replaced by perpetual increasing returns. c. People have learned to survive well on fewer resources. d. The world's population growth has slowed dramatically.

Technological change increased production substantially even though short-run diminishing returns was operative. - Technological change moves the economy to higher production possibilities even though short-run diminishing returns will always be present.

AFC behavior

The average fixed cost function continuously declines as production increases.

If you are called into a firm as a consultant and want some production information, which of the following would the firm have the easiest time generating? a. The marginal product of capital b. The marginal product of labor c. The average product of labor d. All the above are easy to generate from data taken at one point in time

The average product of labor -Total product/# of workers is readily avaible

Which statement is false about perfectly competitive firms? a.The total revenue function is positively sloped and linear, with a slope equal to the product price. b.The total cost function is linear, with a positive slope. c.Marginal cost is rising and equal to average cost at long-run equilibrium output. d.The firm will shut down if price is below average variable cost.

The total cost function is linear, with a positive slope. - Any time increasing and diminishing returns exist the cost curve cannot be linear.

Bonnaroo

YOU WILL BE THERE OMFG

In a competitive industry in the long run, it is likely that

all firms that respond wisely to market signals will have the same LAC. - mandatory.

The typical short-run production function assumes a. that the amount of the input that complements labor stays constant. b. all labor is of the same quality and exerts the same effort. c. both increasing and diminishing returns. d. all of the above. e. none of the above

all of the above -A short run production function has fixed capital or land or some non labor fixed input. -Each unit of labor must be identical for a smooth function and if these are true there will be increasing and decreasing returns as the variable input is increased.

The marginal rate of technical substitution can be measured by

all of the above (below) 1) the slope of an isoquant 2) the ratio of the marginal products of the two inputs 3) the amount of capital that must be substituted for a given reduction of labor in a production process in order to keep output from falling

Which statement is true of perfectly competitive firms in the long run? a..Firms can be of many different sizes if the long run supply curve is horizontal. b.If economies of scale and dis-economies of scale exist, firms will all be the same size. c.No firms will be making economic profits. d.All the above are true.

all the above are true - In the long run no one has economic profit, and they will be the same size at the bottom of the LATC unless the LATC curve is horizontal in which case any size firm can compete.

A (TC) total cost function and a (TVC) total variable cost function will

always be parallel -The distance between them is TFC, which will not vary.

Why does an Isoquant curve slope downward?

because MTRS of labour for capital diminishes. When we increase labour, we have to decrease capital to produce a given level of output.

If a competitive firm hopes to make continuous economic profit it will have to

continually innovate to stay ahead of the competition. - Firms are price takers so they do not have pricing power. Advertising with a homogeneous product would help competitors as much as a given firm.

If there are three production processes to choose among, it is best to

divide up the output among the processes so that the marginal cost is the same in each process -If the MCs are not the same it will always be better to shift resources to the lowest MC operation until they equalize.

Law of Diminishing Returns

if other inputs are fixed, the increase in output from and increase in variable input must eventually decline (short run)

A standardized product is necessary for the perfect-competition model to work because

if the products are not perfect substitutes, then firms can develop customer loyalty to their unique type of product and will be able to charge a bit more than the market would otherwise allow - Perfect information and many buyers and sellers are also part of perfect competition.

MRTS (marginal rate of technical substitution)

illustrates the rate at which one factor must decrease so that the same level of productivity can be maintained when another factor is increased.

If labor is more plentiful than capital in a country, it is likely that in that country

labor-intensive products will be produced at lower cost than capital intensive countries that can produce them -Labor will be cheap and profit-maximizing entrepreneurs will produce things that require labor rather than capital.

Let it be

le et bee

Long-run cost functions that exhibit increasing returns to scale over the entire relevant output range lead to

minimal competition and often monopoly because the market cannot support numerous large firms taking advantage of the economies of scale. -We call these natural monopolies

Assume for a competitive firm that MC = AVC at $12, MC = ATC at $20, and MC = MR at $16. This firm will:

minimize it's losses by producing in the short-run

When a profit-maximizing firm is at its short-run optimum point, a.the average cost of the product is at its lowest possible point whether a profit is being made or not b.the firm will be shut down if its price is less than the average fixed cost. c.the profit per unit of output will be at its maximum possible level. d.all the above will be true. e.none of the above will he true.

none of the above will be true - Profit per unit is not important because if a smaller margin on more units brings more profits, the smaller margin is better.

If the average total cost is 100 for a given output and marginal cost is 70, we then know that average fixed cost is

not possible to determine with the information given - We would need to know what the average variable cost is before we can know AFC.

Profit maximization is a reasonable assumption to build a theory around because a.natural selection tends to weed out those who sacrifice profit for other goals. b.profitable firms have easier access to capital markets than unprofitable firms. c.managers, who otherwise have little incentive to maximize firm profit, become maximizers because of profit sharing and bonus incentives. d.of all the above reasons.

of all the above reasons - It is possible for a person to not profit maximize if other goals are preferred.

Isoquants are concave from above because

of diminishing returns -Input (A) can be replaced by a small amount of input (B) when (A) is heavily used

The statement that marginal cost = marginal revenue leads to profit maximization or loss minimization is true

only if marginal cost is rising at the point of equality -If MC is falling you could be loss maximizing.

TFC (total fixed cost)

the costs of the fixed assets (those that do not vary with production). -straight horizontal line -do not depend on the level of output in the short-run

The monopoly supply curve is

undefined; does not exist

A natural monopoly exists when:

unit costs are minimized by having one firm produce an industry's entire output.