14

Refer to Table 14-3. At which quantity of output is marginal revenue equal to marginal cost?

$6

Refer to Table 14-4. What is the marginal cost of the 5th unit?

$68

When a profit-maximizing firm in a competitive market has zero economic profit, accounting profit

is positive

Refer to Figure 14-1. When price rises from P3 to P4, the firm finds that

it can earn a positive profit by increasing production to Q4

Refer to Figure 14-1. When price falls from P3 to P1, the firm finds that

it should shut down immediately

Competitive firms that earn a loss in the short run should

Shut down if P<AVC

Refer to Scenario 14-2. At Q = 1,000, the firm's profit amounts to

$1000

Refer to Scenario 14-2 and the answer in question 24. At Q = 999, the firm's profit amounts to

$1003

Refer to Scenario 14-2. At Q = 999, the firm's total cost amounts to

$10985

Consider a firm operating in a competitive market. The firm is producing 40 units of output, has an average cost of production equal to $5, and is earning $240 economic profit in the short run. What is the current market price?

$11

Refer to Table 14-4. What is John's Vineyard's economic profit at its profit-maximizing output level?

$115

Refer to Table 14-4. What is the marginal cost of the 8th unit?

$120

Suppose that a firm is currently maximizing its short-run profit at an output of 50 units. If the current price is $9, the marginal cost of the 50th unit is $9, and the average cost of producing 50 units is $4, what is the firm's profit?

$250

Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8.00. What would be the firm's total revenue if it instead produced and sold 4 units of output?

$32

Refer to Table 14-4. What is the total revenue from selling 4 units?

$320

Refer to Table 14-4. What is the total revenue from selling 7 units?

$560

Refer to Table 14-4. What is the average revenue when 4 units are sold?

$80

Refer to Table 14-4. What is the marginal revenue from selling the 1st unit?

$80

Refer to Table 14-4. What is the marginal revenue from selling the 5th unit?

$80

Refer to Figure 14-4. When market price is P5, a profit-maximizing firm's profits can be represented by the area

(P5-P4) x Q3

Comparison of marginal revenue to marginal cost

(i) and (ii) only

Refer to Table 14-4. At what quantity does John's Vineyard maximize profits?

6

Refer to Figure 14-2. If the firm is in a short-run position where P < AVC, it is most likely to be on what segment of its supply curve?

AB

Refer to Figure 14-2. Which line segment best reflects the short-run supply curve for this firm?

ABCE

Refer to Figure 14-7. Suppose a firm in a competitive market, like the one depicted in panel (a), observes market price rising from P1 to P2. Which of the following could explain this observation?

An increase in market demand from Demand0 to Demand1.

Refer to Figure 14-4. When market price is P2, a profit-maximizing firm's losses can be represented by the area

At a market price of P2 the firm has losses, but the reference points in the figure don't identify the losses.

Which of the following represents the firm's long-run condition for exiting a market?

Exit if P<ATC

Which of the following statements best reflects a price-taking firm?

If the firm were to change more than its going price, it would sell none of its goods

Refer to Table 14-1. Over what range of output is marginal revenue declining?

None, marginal revenue is constant

Refer to Figure 14-4. Firms would be encouraged to enter this market for all prices that exceed

P3

When economic profits are zero in equilibrium, the firm's revenue must be sufficient to cover all opportunity costs.

True

When calculating marginal cost, what must the firm know?

Variable Cost

Refer to Figure 14-7. Assume that the market starts in equilibrium at point A in panel (b). An increase in demand from Demand0 to Demand1 will result in

an eventual increase in the number of firms in the market and a new long-run equilibrium at point C.

Refer to Scenario 14-2. To maximize its profit, the firm should

decrease its out put but continue to produce

Refer to Figure 14-1. When price rises from P2 to P3, the firm finds that

expanding output to Q4 would leave the firm with losses

Refer to Figure 14-7. If the market starts in equilibrium at point C in panel (b), a decrease in demand will ultimately lead to

fewer firms in the market.

In a competitive market, the actions of any single buyer or seller will

have a negligible impact on the market price

Refer to Figure 14-7. When the market is in long-run equilibrium at point A in panel (b), the firm represented in panel (a) will

have a zero economic profit

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

many other sellers are offering a product that is essentially identical

The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which

profit is maximized

Refer to Table 14-3. If the firm finds that its marginal cost is $11, it should

reduce production to increase profit

When total revenue is less than variable costs, a firm in a competitive market will

shut down

When fixed costs are ignored because they are irrelevant to a business's production decision, they are called

sunk costs

In a perfectly competitive market, the horizontal sum of all the individual firms' supply curves is

the market supply curve

The short-run supply curve for a firm in a perfectly competitive market is

the portion of its marginal cost curve that lies above its average variable cost