Question 1

If a firm's total variable cost exceeds its total revenue,the firm should stop production by shutting down temporarily.

Accepted Answer

A) True 
 B)False

Question 2

A perfectly competitive firm's short-run supply curve is

Accepted Answer

A)  upward sloping and is the portion of the marginal cost curve that lies above the average total cost curve. 
B)  upward sloping and is the portion of the marginal cost curve that lies above the average variable cost curve. 
C)  perfectly elastic at the market price. 
D)  horizontal at the minimum average total cost. 
A)  upward sloping and is the portion of the marginal cost curve that lies above the average total cost curve. 
B)  upward sloping and is the portion of the marginal cost curve that lies above the average variable cost curve. 
C)  perfectly elastic at the market price. 
D)  horizontal at the minimum average total cost.

Question 3

In an increasing-cost industry,the long-run supply curve is upward sloping.

Accepted Answer

A) True 
 B)False

Question 4

-Refer to Figure 7-11.Suppose the prevailing price is P1 and the firm is currently producing its loss-minimising quantity.If the firm represented in the diagram continues to stay in business,in the long-run equilibrium

Accepted Answer

A)  it will reduce its output to Q0 and face a price of P0. 
B)  it will continue to produce Q1 but faces the higher price of P2. 
C)  it will expand its output to Q2 and face a price of P2. 
D)  it will expand its output to Q3 and face a price of P1. 
A)  it will reduce its output to Q0 and face a price of P0. 
B)  it will continue to produce Q1 but faces the higher price of P2. 
C)  it will expand its output to Q2 and face a price of P2. 
D)  it will expand its output to Q3 and face a price of P1.

Question 5

Marginal revenue is

Accepted Answer

A)  total revenue divided by the total quantity of output. 
B)  the change in profit divided by the change in the quantity of output. 
C)  the change in total revenue divided by the change in total cost. 
D)  the change in total revenue divided by the change in the quantity of output. 
A)  total revenue divided by the total quantity of output. 
B)  the change in profit divided by the change in the quantity of output. 
C)  the change in total revenue divided by the change in total cost. 
D)  the change in total revenue divided by the change in the quantity of output.

Question 6

Figure 7-7   Figure 7-7 shows cost and demand curves facing a profit-maximising, perfectly competitive firm.
-Refer to Figure 7-7.At price P2,the firm would produce

Accepted Answer

A)  Q2 units. 
B)  Q3 units. 
C)  Q4 units. 
D)  zero units. 
A)  Q2 units. 
B)  Q3 units. 
C)  Q4 units. 
D)  zero units.

Question 7

Suppose Veronica sells teapots in the perfectly competitive teapot market.Her output per day and her costs are as follows:
   Suppose the current equilibrium price in the teapot market is $20.To maximise profit,how many teapots will Veronica produce,what price will she charge,and how much profit (or loss)will she make? Draw a graph to illustrate your answer.Your graph should include Veronica's demand,ATC,AVC,MC,and MR curves,the price she is charging,the quantity she is producing,and the area representing her profit (or loss).

Accepted Answer

Veronica will produce 6 teapot

Question 8

What is meant by the term 'long-run competitive equilibrium'?

Accepted Answer

Long-run competitive equilibri

Question 9

In the short run,if a firm shuts down its maximum loss equals the amount of its fixed cost.

Accepted Answer

A) True 
 B)False

Question 10

Figure 7-6  
-Refer to Figure 7-6.Suppose the firm produces 4000 units.What does the shaded area labelled A represent?

Accepted Answer

A)  Total variable cost 
B)  Profit 
C)  Total fixed cost 
D)  Total revenue 
A)  Total variable cost 
B)  Profit 
C)  Total fixed cost 
D)  Total revenue

If a firm's total variable cost exceeds its total revenue,the firm should stop production by shutting down temporarily.

A perfectly competitive firm's short-run supply curve is

In an increasing-cost industry,the long-run supply curve is upward sloping.

-Refer to Figure 7-11.Suppose the prevailing price is P₁ and the firm is currently producing its loss-minimising quantity.If the firm represented in the diagram continues to stay in business,in the long-run equilibrium

Marginal revenue is

Figure 7-7 Figure 7-7 shows cost and demand curves facing a profit-maximising, perfectly competitive firm. -Refer to Figure 7-7.At price P₂,the firm would produce

What is meant by the term 'long-run competitive equilibrium'?

In the short run,if a firm shuts down its maximum loss equals the amount of its fixed cost.

Figure 7-6 -Refer to Figure 7-6.Suppose the firm produces 4000 units.What does the shaded area labelled A represent?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

Exam 7: Consumer Choice and Elasticity

If a firm's total variable cost exceeds its total revenue,the firm should stop production by shutting down temporarily.

A perfectly competitive firm's short-run supply curve is

In an increasing-cost industry,the long-run supply curve is upward sloping.

-Refer to Figure 7-11.Suppose the prevailing price is P1 and the firm is currently producing its loss-minimising quantity.If the firm represented in the diagram continues to stay in business,in the long-run equilibrium

Marginal revenue is

Figure 7-7 Figure 7-7 shows cost and demand curves facing a profit-maximising, perfectly competitive firm. -Refer to Figure 7-7.At price P2,the firm would produce

What is meant by the term 'long-run competitive equilibrium'?

In the short run,if a firm shuts down its maximum loss equals the amount of its fixed cost.

Figure 7-6 -Refer to Figure 7-6.Suppose the firm produces 4000 units.What does the shaded area labelled A represent?

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters

-Refer to Figure 7-11.Suppose the prevailing price is P₁ and the firm is currently producing its loss-minimising quantity.If the firm represented in the diagram continues to stay in business,in the long-run equilibrium

Figure 7-7 Figure 7-7 shows cost and demand curves facing a profit-maximising, perfectly competitive firm. -Refer to Figure 7-7.At price P₂,the firm would produce