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In this graph, TC is total cost and TR is total revenue. At which level of output is profit maximized?
(A)Q1
(B)Q2
(C)Q3
(D)Q4
(E)Q5
The most profitable level of output for any firm operating in the short run is the level of output at which
(A)marginal revenue exceeds marginal cost by the highest amount
(B)marginal revenue equals marginal cost
(C)price exceeds average cost by the highest amount
(D)price equals average cost
(E)price equals marginal cost
What market structure does the firm represented in this graph operate in, and what is the profit-maximizing quantity?
(A)Market Structure = Monopoly ; Quantity = Q6
(B)Market Structure = Monopoly ; Quantity = Q7
(C)Market Structure = Perfect Competition ; Quantity = Q5
(D)Market Structure = Perfect Competition ; Quantity = Q8
(E)Market Structure = Perfect Competition ; Quantity = Q7
W represents the nominal wage, P represents the price of the product, and MPL represents the marginal product of
labor. Which of the following represents the marginal cost (MC) of production in the short-run for a perfectly
competitive firm?
(A)MC = W/MPL
(B)MC = P(MPL)
(C)MC = W(MPL)
(D)MC = P/MPL
(E)MC = MPL/W
A firm is maximizing profit and experiencing diminishing returns. Its product price is $30, and the corresponding
marginal cost is $30. Based on this scenario, what must be true for this firm?
(A)It’s a perfectly competitive firm
(B)It’s a single-price firm in monopolistic competition
(C)If it’s a monopoly, it must produce less to maximize profit
(D)If it’s a monopoly, it must produce more to maximize profit
(E)It must shutdown if it’s a perfectly competitive firm
A firm in a perfectly competitive market is producing where profits are maximized. If the marginal physical product of
labor is 100 units per day and the firm pays a wage rate of $50 per day, which of the following is true?
(A)The output price is $0.50 per unit.
(B)The marginal cost is $2.
(C)The average total cost is $0.50 per unit.
(D)The marginal revenue product of labor is $5000.
(E)The output price is $2 per unit.
If the price of good Z is greater than marginal cost. Which of the following actions would lead to greater efficiency?
(A)Produce more of good Z
(B)Produce less of good Z
(C)Don’t change the amount of good Z you produce
(D)Tax the production of good Z
(E)Implement an effective price floor on good Z
A firm in a perfectly competitive market is earning economic profits. It produces and sells 10 tacos at a price of $10 per
unit. If its marginal cost of increasing output to a rate of 11 tacos is $9, which of the following statements is correct?
(A)The total profit from selling 11 tacos is $1 greater than the total profit from selling 10 tacos.
(B)The total revenue from selling 11 tacos = total revenue from selling 10 tacos.
(C)The total cost of producing 11 tacoss is $1 greater than the total cost of producing 10 tacos.
(D)To sell 11 tacos, the firm must reduce its price below $10.
(E)To sell 11 tacos, the firm must raise its price above $10.
Let’s say we’re looking at a perfectly competitive market in the short-run. What will be the shape of the market demand
curve and a firm’s demand curve?
(A)Market Demand Curve = Horizontal ; Firm’s Demand Curve = Upward Sloping
(B)Market Demand Curve = Vertical ; Firm’s Demand Curve = Horizontal
(C)Market Demand Curve = Downward Sloping ; Firm’s Demand Curve = Downward Sloping
(D)Market Demand Curve = Downward Sloping ; Firm’s Demand Curve = Horizontal
(E)Market Demand Curve = Horizontal ; Firm’s Demand Curve = Vertical
A firm sells its product in a perfectly competitive industry for a price of $30 per unit and hires workers at a daily wage of
$300. Labor is the only variable cost, and the firm is currently earning profits. If the firm hires one more worker and
output increases by 10 units per day, the firm's profits will
(A)decrease by $10
(B)remain unchanged
(C)increase by $300
(D)increase by $30
(E)decrease by $300