Question

· Question 7

	In the break-even analysis, a lower average variable cost (AVC):
	Will result in a higher break-even output Will result in a lower break-even output Will result in either a lower or higher break-even output Will lower the contribution margin ratio

· Question 8

	In the break-even analysis where AVC is assumed to be constant, at each output,
	AVC and MC are equal AVC is greater than MC AVC is less than MC AVC can be greater or less than MC

· Question 9

	In the short-run, a competitive firm which seeks to maximize profit will produce:
	The output where economic profit is zero Where price and marginal cost are equal Where total revenue and total cost curves intersect Where price exceeds ATC by maximum amount

Answer 1

7.When AVC is low then there would be a higher break even output,because more can be produced at lower cost of production.

Answer-A

8.When AVC is contact then MC is also constant,such that MC=AVC at each level of output.

Answer-A

9.A competitive firm profit maximizing condition:Price=marginal cost.

Answer-B