Question

14. Refer to Figure 13-8. Which of the following statements is correct? a. Marginal cost is rising for quantities higher than D because marginal cost is higher than average total cost. b. Average variable cost is declining for quantities less than B because marginal cost is lower than average variable cost. c. Marginal cost is minimized at B because at that quantity, marginal cost equals average variable cost. d. All of the above are correct. 15. When marginal cost is less than average total cost, a marginal cost must be falling. b. average variable cost must be falling. c. average total cost is falling, d. average total cost is rising, 16. Which of the following is not a characteristic of a competitive market? a. Buyers and sellers are price takers. b. Each firm sells a virtually identical product. c. Entry is limited d. Each firm chooses an output level that maximizes profits. 17. If a competitive firme ve firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then a. a one-unit increase in output will increase the firm's profit. b. a one-unit decrease in output will increase the firm's pront. c. total revenue exceeds total cost. d. total cost exceeds total revenue. 18. At the profit maximizing level of output. 2. marginal revenue equals average total cost. b. marginal revenue cquals average variable cost c. marginal revenue equals marginal cost.

Answer 1

Solution: (14) The Statement tant is correct from figure is : Graph: a cost Mc ATC Ave. ī Quantity A B C D mc is minimised at / from the figure we can see that point A and not in pointB. mc is rising for quantities higher than C because MC is higher than ATC. 80, Optime (B) is correct. ®: Average variable cost is declining for quantities less than B because marginal cost is lower than the Ave