Question

Refer to the information prorided in Figure 8.6 below to ansu Cost curves for Outdoor Equipment 3 Number of sleeping bags Figure 8.6 21) Refer to Figure 8.6. Curve 1 is Outdoor Equipments 21 A) average fixed cost curve. C) marginal cost curve. B) average variable cost curve. D) average total cost curve 22) Refer to Figure 8.6. Curve 2 is Outdoor Equipment's A) average fixed cost curve C) average total cost curve B) average variable cost curve D) marginal cost curve. 23) Refer to Figure 8.6. The vertical distance AB is Outdoor Equipment's A) total fixed cost. C) average fixed cost. B) marginal cost D) total cost. 24) If an individual perfectly competitive firm charges a price above the industry equilibrium price, it will A) not sell any of what it produces. B) sell part of what it can produce and gain less revenue than competitors will. C) sell all that it can produce and gain equal revenue with competitors. D) sell all that it can produce and gain more revenue than competitors. 25) Marginal revenue for a perfectly competitive firm is B) horizontal. D) upward sloping. A) downward sloping. C) vertical.

Answer 1

Q21
Option C
A marginal cost curve is an upward sloping curve, and it cuts average total cost and average variable cost at its minimum where ATC>AVC.
Curve 1 is the marginal cost curve.

Q22
Answer
Option B
A marginal cost curve is upward sloping curve, and it cuts average total cost and average variable cost at its minimum
Curve 2 is the AVC curve, and Curve 3 is the ATC curve
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Q23
Answer
Option C
AFC=ATC-AVC
so the distance between point A and B is AFC.
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Q24
Answer
Option A
A perfectly competitive firm is price taker and has a perfectly elastic demand curve so the price above equilibrium price firm can not sale any output.
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Q25
Answer
Option B
The demand and the marginal revenue curve is the same as the firms are price taker and the price is fixed, so the marginal revenue is also the same as price.