24) Firms seek to maximize: A) total revenue. C) total profit. 24) B) market sha

Question

24) Firms seek to maximize: A) total revenue. C) total profit. 24) B) market share. D) per unit profit. 25) Which of the following statements is correcf 25) A) The demand curve for demand curve for a purely competitive r a purely competitive firm is perfectly elastic, but the industry is downsloping. demand curves are downsloping for both a purely competitive firm and a purely competitive industry C) The demand are purely competitive industry D) The demand curve for a purely competitive firm is downsloping. curves are perfectly elastic for both a purely competitive firm and a but the demand curve for a purely competitive industry is perfeetly elastic. 26) The MR MC rule applies: 26) A) to firms in all types of industries B) only to purely competitive firms C) only to monopolies. D) only when the firm is a "price taker. 27) Which of the following is not a valid generalization concerming the relationship between 27) price and costs for a purely competitive seller in the short run? A) Price must be equal to or greater than minimum average variable cost for the firm to continue producing. B) Price times quantity produced must be equal to or greater than total variable cost for some level of output or the firm will close down in the short run. C) Price may be equal to, greater than, or less than average total cost. D) Price must be at least equal to average total cost. 28) 28) A purely competitive firm's short-run supply curve is: A) upsloping only when the industry has constant costs. B) perfectly elastic at the minimum average total cost. C) upsloping and equal to the portion of the marginal cost curve that lies above the average total cost curve. of the marginal cost curve that lies above the D) upsloping and equal to the portion average variable cost curve. AVC. You 9) price of your prodact is less than minimum Av 29) Suppose you find that the A) close down becau B) close down because, by producing, your losses will ex C) maximize your profits by producing where P-MCed o total D) minimize your losses by producing where P MC should: use total revenue exceeds total variable cost. A-5

Explanation / Answer

24) A firm, primarily, seeks to maximize the gap between the total revenues and costs of production. Thus, the primary objective of any firm is to maximize profits.

Thus, the correct answer is option (C) total profits.

25) The firms under perfect competition face a given price because of competition. Thus, the firms supply whateevr is demanded at the industry determined price. Therefore, the demand curve is perfectly elastic that implies that the consumer can consume at at quantity given the level of fierce competition. However, the demand curve for the industry is downward sloping. Ths implies that whatever be the conditions of competition in the market, the general rule of inverse relationship between price and quantity demanded comes into play.

Thus, the correct answer is option (A) the demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely competitive industry is downsloping.

26) A firm under any industry seeks to ensure that the additional revenue generated from a unit of output is at least equal to the additional cost of producing the same, if not more than the cost. Thus, the marginal revenue equal to marginal cost rule applies for all firms operating in any market.

Thus, the correct answer is option (A) to firms in all types of industries.

27) The firm under perfect competition will not operate at a point where the average variable cost exceeds the price. That is, even if the firm is not able to cover all its costs, it must be able to cover its variable costs to continue operating in the industry. The price must be atleast equal to the average variable costs for a firm to continue in the industry in the short - run. The decision to continue is based on the basic relationship where the conditions mentioned in options A, B and C satisfy.

Thus, the correct answer is option (D) price must be atleast equal to the average total cost.

(28) The supply curve in perfect competition is the rising portion of the MC curve in the short run.

The correct answer is option (D) upsloping and equal to the portion of the marginal cost curve that lies above the average variable cost curve.

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.