7. Economists use the three-step method to determine whether a firm is generating economic profits, economic losses, or zero economic profits at the ______.
a.profit-minimizing level of input
b.profit-maximizing level of input
c.profit-minimizing level of output
d.profit-maximizing level of output
8. Economists sometimes call zero economic profit a ______ rate of return.
a.normal
b.natural
c.neutral
d.negative
9.It is not likely that firms will either enter or leave the market ______.
a.at positive economic profits
b.at zero economic profits
c.at economic losses
d.at growing economic profits
10. ______ efficiency means that for the last unit produced, the Marginal Benefit to society = Marginal Cost of production.
a. Productive
b.Marginal
c.Modified
d.Allocative
11. ______ efficiency means that the firm is producing at the lowest possible cost per unit.
a.Marginal
b.Modified
c.Allocative
d.Productive
12. Marginal revenue in a perfectly competitive firm is equal to the price of the good.
a.True
b.False
Ans.7- (D)
Economists use the three-step method to determine whether a firm is generating economic profits, economic losses, or zero economic profits at the profit maximizing level of output.
Ans.8- (A)
Normal rate of return occurs when a firm is earning 0 economic profits.
Ans.9- (B)
At zero economic profits, no firm has any incentive to enter or exit the industry .So, It is not likely that firms will either enter or leave the market
Ans.10- (D)
Ans.11- (C)
Ans.12- True
MR = P = AR for a perfectly competitive firm.
7. Economists use the three-step method to determine whether a firm is generating economic profits, economic...
Suppose that a perfectly competitive firm faces a market price of $ 12 12 per unit, and at this price the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curve at an output level of 1 comma 800 1,800 units. If the firm produces 1 comma 800 1,800 units, its average variable costs equal $ 7.00 7.00 per unit, and its average fixed costs equal $ 1.00 1.00 per unit. What is the firm's profit-maximizing (or...
Statement 1: A monopoly firm can make positive economic profits in the short run. Statement 2: A monopoly firm can make positive economic profits in the long run. Statement (1) and statement (2) are both false. Statement (1) and statement (2) are both true. Statement (1) is true; statement (2) is false. Statement (1) is false; statement (2) is true. Afirm finds that the profit-maximizing level of output, Q is equal to 100 units. At this quantity, P - $5,...
1l. If a monopolistically competitive firm is incurring losses, then at the profit-max a price is above the average total cost curve. b. price is below the average total cost curve c. price is equal to marginal revenue. d. price is less than marginal revenue. e. average total cost equals marginal cost. Both competitive and monopolistically competitive firms a. can maximize profit by raising price. b. cannot control or set their own price c. can maximize profit by producing to...
Part VI Multiple Choice: Imperfect Competition 13. If a firm with market power maximizes profit by producing at the unit elastic point on the demand curve, then a. it has no direct competitors. b. its marginal cost must be zero at the profit-maximizing level of output. c. demand must be perfectly elastic. d. it cannot be in long-run equilibrium. 14. Which of the following statements is not always true for a monopolist in short-run equilibrium? a. E 1 b, TR>...
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A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has average revenue of $10, and its average total cost is $9. Does the firm have profits or losses? The firm has a loss of S100. The firm has a profit of $100. The firm has a loss of S200. The firm has a profit of $200 Figure 14-7 In the figure, panel (a) depicts the linear marginal cost of a...