Microeconomics Perf Comp In The Short Run Quiz

When a perfectly competitive firm sells additional units of output, its total revenue will

Increase at a constant rate

At a perfectly competitive firm's current output level, average total cost is $15, average variable cost is $10, and marginal cost is $8 and increasing. If the product price is $15, what should this firm do to maximize profits?

increase the quantity of output produced

All of the following are essential characteristics of a perfectly competitive industry EXCEPT:

There are barriers to entry into and exit from the industry.

A firm is producing 100 units of output at a total cost of $400. The firm's average variable cost is $3 per unit. What is the firm's total fixed cost?

$100

Based on the cost and output data in the table below, a perfectly competitive firm will shut down if price falls below:

$15

Based on the cost and output data above, if a perfectly competitive firm had a total fixed cost of $50, and the profit maximizing price and quantity was $30 and 4 units, what would the firm’s total profit and would they operate or shutdown?

\-2, operate?

Which of the following statements relating to a profit-maximizing perfectly competitive firm is true?

The firm's price is given by the market and is equal to marginal revenue.

Assume that a firm is maximizing short-run profits and that price is greater than average variable cost. Which of the following must be true at the firm's level of output?

Marginal revenue is equal to marginal cost.

A farmer produces peppers in a perfectly competitive market. If the price falls, in the short run, the farmer should

Continue to produce only if the new price covers average variable costs

A profit-maximizing firm will shut down in the short run any time the firm's total revenue is less than its

Total variable cost

how many units of output should a firm with the cost and demand curves shown above produce to maximize profit?

Q3

The diagram above shows a perfectly competitive firm's short-run cost curves. If the price of the output increases from $8 to $10, the profit-maximizing firm will

increase output to 18 units because this is the output at which price equals marginal cost.

For a perfectly competitive firm producing the profit-maximizing quantity, the average total cost is $10 and the average variable cost is $8. If the market price for its product is $10, which of the following is true for the firm?

It is earning zero economic profit and will remain in business.

In the short run, which of the following must be true for a perfectly competitive firm that is maximizing profits?

The firm will produce where MR=MC as long as P is greater than AVC