econ chpater 8 test review

If the price that a firm charges is higher than its __________ cost of production for that quantity produced, then the firm will earn profits.

average

When a business adopts a strategy of reducing and/or discontinuing production in response to a sustained pattern of losses, it is

preparing to exit operations

In the ________, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where __________.

short run; losses are smallest

If a firm's revenues do not cover its average variable costs, then that firm has reached its

shutdown point

Refer to the diagram below. In this instance, point "e" shown on the graph indicates

the point where profits will increase by reducing output

Refer to the diagram below. In this instance, at the range of output represented at point b

total costs exceed total revenues

Refer to the diagram below. Based on the information illustrated in this graph, which of the following is an accurate statement?

profits will be reduced by production in the zone where MC exceeds MR

Given the data provided in the table below, what will the amount of profit be for production at quantity (Q) level 7?

-$10.00

Given the data provided in the table below, the total revenue (TR) for production at quantity (Q) level 4 equals:

$20.00

In order to produce 100 oatmeal cookies, Goodie Cookie Co incurs an average total cost of $0.25 per cookie. The company's marginal cost is constant at $0.10 for all oatmeal cookies produced. The total cost to produce 50 oatmeal cookies is

$20

Given the data provided in the table below, what will the marginal cost equal for production at quantity (Q) level 4?

$4.00

Given the data provided in the table below, what will the fixed costs equal for production at quantity (Q) level 4?

$9.00

Neil's Bakery is famous for its giant cinnamon buns. The bakery has fixed costs of $100. Neil must pay each worker a wage of $10.00 per hour and each works an 8 hour shift. He earns $2 for each cinnamon bun that is sold. The following table shows how many cinnamon buns he can sell, depending on the number of workers he hires. Refer to the table below. To maximize his profits in this competitive market, how many workers should he hire?

3 workers

An ___________ is calculated by subtracting the firm's costs from its total revenues, _______________.

accounting profit; excluding opportunity cost

Kate's 24-Hour Breakfast Diner menu offers one item, a $5.00 breakfast special. Kate's costs for servers, cooks, electricity, food, etc. average out to $3.95 per meal. Her costs for rent, insurance cleaning supplies and business license average out to $1.25 per meal. Since the market is highly competitive, Kate should

keep the business open in the short-run, but plan to go out of business in the long-run

Refer to the table below. In this instance, confirmation that this firm is operating in a perfectly competitive market can readily be ascertained by the fact that its

marginal revenue is constant

What happens in a perfectly competitive industry when economic profit is greater than zero?

new firms may enter the industry and all of the above

f a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the _______ and the vertical axis will represent _

quantity produced; both total revenue and total costs, measured in dollars