Suppose TC = 10 + (0.1 q2). If p = 10, the firm’s profits will be A) 240. B) 250. C) 260. D) -10 because the firm will shut down. ANSWER A
Date: September 9th, 2020
If a firm is currently in short-run equilibrium earning a profit, what impact will a lump-sum tax have on its production decision? A) The firm will decrease output to earn a higher profit. B) The firm will increase output but earn a lower profit. C) The firm will not change output but earn a lower […]
Date: September 9th, 2020
The existence of a deadweight loss associated with a monopoly can be seen because A) consumers are willing to pay more for the last unit of output than it costs to produce. B) the cost of the last unit produced is more than consumers are willing to pay for it. C) the producer surplus is […]
Date: September 9th, 2020
The loss associated with the fact that at the profit-maximizing quantity consumers value the goods more than it cost to produce them is called A) deadweight loss. B) comparative loss. C) Lerner Loss. D) Consumer Value Loss. ANSWER A
Date: September 9th, 2020
In a graph of a firm’s short-run total costs and total revenue, the total cost and the total revenue curves, respectively, will intersect the vertical axis A) above the origin, above the origin. B) above the origin, at the origin. C) at the origin, at the origin. D) below the origin, below the origin. […]
Date: September 9th, 2020
Suppose a competitive firm’s total revenue is $1,000,000 where MR = MC, its explicit variable costs are $900,000, its fixed costs are $90,000 of which $60,000 are sunk in the short run. If its implicit opportunity costs are $50,000, the firm should A) produce because its economic profit is positive. B) produce because its economic […]
Date: September 9th, 2020
The reasons why a competitive firm’s short-run supply curve is upward sloping are A) the law of diminishing marginal returns and profit maximization. B) constant returns to scale and profit maximization. C) decreasing returns to scale and profit maximization. D) Both B and C. ANSWER A
Date: September 9th, 2020
The competitive firm’s supply curve is equal to A) its marginal cost curve. B) the portion of its marginal cost curve that lies above AC. C) the portion of its marginal cost curve that lies above AVC. D) the portion of its marginal cost curve that lies above AFC. ANSWER C
Date: September 9th, 2020
A firm should always shut down if its revenue is A) declining. B) less than its average fixed costs. C) less than its total costs. D) less than its avoidable costs. ANSWER D
Date: September 9th, 2020
If a firm is a price taker, then its marginal revenue will always equal A) price. B) total cost. C) zero. D) one. ANSWER A
Date: September 9th, 2020
