Question

1) A firm's production function is the relationship between: 1) _______
A) the demand for a firm's output and the quantity it is able to produce with available resources.

B) the factors of production and the resulting outputs of the production process.
C) the firm's production costs and the amount of revenue it receives from the sale of its output.
D) the inputs employed by the firm and the resulting costs of production.

2) The demand curve faced by the individual perfectly competitive firm is:

1. A) perfectly elastic.

2. B) unit elastic.

3. C) perfectly inelastic.

4. D) elastic or inelastic depending on price.

3) A perfectly competitive firm will minimize its losses by shutting down when:

1. A) P < ATC at the profit-maximizing level of output.

2. B) P < TFC at the profit-maximizing level of output.

3. C) P < MC at the profit-maximizing level of output.

4. D) P < AVC at the profit-maximizing level of output.

4) Consumers don't care which supplier they buy from in a perfectly competitive market because: 4) ______

A) price is always low enough that the choice of supplier doesn't matter.
B) the outputs of the firms in a perfectly competitive market are all the same. C) the consumers have no choice regarding who they buy from.
D) all of the above.

Answer 1

Ans1) the correct option is B) the factors of production and the resulting outputs of the production process

Ans2) the correct option is A) perfectly elastic.

Ans3) the correct option is D) P < AVC at the profit-maximizing level of output.

Ans4) the correct option is B) the outputs of the firms in a perfectly competitive market are all the same.