Question

Question 7 Not yet anwed Points out of 1.00 P Flag question If a perfectly competitive firm is producing 2.500 units and, at the 2,500th unit, the difference between marginal revenue and marginal cost (MR-MC) POsitive, which of the following is true? Select one: A. The firm shouid increase production to maximize profit B. The 2,500th unit costs more to produce than the firm earns in revenue O C. The firm should decrease production to maximize proft D. The inm is maximizing profit Queation 8 Not yet anwered Points out of 1.00 y riag ouwstonA the market supply to deorease If a perfectly competitive firm is producing the short-run profit-maximizing quantity and is earning negative economic profits, the firm should antioipate Select one B. the market oquitrum price to decrease C. the market supply to increase D. new fims to enter the market If a perfecty competitive firm is producing the short-run profn-maximizing quantity and is eaming positive economic profits, the firm should anticipate Not yet answered Points out of 1.00 Select one: A. eaming economic profits indefinitely B. the market supply to decrease C. the market equilibrium price to decrease O D. the market equilbrium price to increase Question 10 Not yet answered Points out of 1.00 P Flag question If a specific tax is implemented Select one: O A. there is less profit per unit sold. B. the firm's average cost curve shifts up, resulting in lower profits. O C. the after-tax marginal cost curve shifts, resulting in lower quantity produced. O D. All of the above.

Answer 1

Q7
Answer
Option A
The firm should increase production to maximize profit.
The firm maximizes profit at MR=MC
MR for a perfectly competitive firm is horizontal, and MC is upward sloping so the MR-MC>0 then the firm is producing where MR>MC but it needed to a product at MR=MC. The MR=MC will be when the output increases. It means the firm needs to increase output up to MR=MC to maximize profit.
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Q8
Answer
Option A
The market supply to decrease
The firm is making a negative economic profit means some of the firms will leave the market and the market supply will decrease and shifts to the left which increases price in the market.

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Q9
Answer
Option C
The market equilibrium price to decrease
The firms are earning the profit in the market so new firms will enter the market, and that will increase supply which shifts the supply curve to the right and decreases price in the long run where economic profit is zero.
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Q10
Answer
Option d
A specific tax shifts the MC curve to up because of the per unit cost increases and also shifts ATC to up. It decreases profit because of lower output and higher costs.