Question

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 firm is currently producing a level of output ir 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 profit. c. total revenue exceeds total cost. d. total cost exceeds total revenue. 18. At the profit-maximizing level of output, a. marginal revenue equals average total cost. b. marginal revenue equals average variable cost. c. marginal revenue equals marginal cost.

Answer 1

(15) Ans: (C) When ATC is above Acc is falling the me, at suggests that (16) Ans: (C) are Entry and exit free in Competitive market. (17) Ans: (A) one unit increase output will give sise to the brofit. (18) Ans: (w Profit is Maximized where MR=me,