13. For a firm in a perfectly competitive market, the price of the good is alway

Question

13. For a firm in a perfectly competitive market, the price of the good is always 14 December 2017 A. equal to marginal revenue. Fall 2017/2018 B. equal to total revenue. 02E/11E/53E/70E C. greater than average revenue. D. equal to the firm's efficient scale of output. 14. Suppose a firm in a competitive market produces and sells 8 units of output and has a marginal revenue of $8.00. What would be the firm's total revenue it it instead produced and sold 4 units of output? A. $4 B. $8 C. $32 D. $64 15. The local Chevrolet dealership has an increase in inventory of 25 newly produced cars in 2006. In 2007, it sells all 25 cars. Which of the following statements is correct? A. The value of the cars in inventory will be counted as part of 2006 GDP, and the value of the cars sold in 2007 will not increase 2007 GDP. B. The value of the cars in inventory will not affect 2006 GDP, and the value of the cars sold in 2007 will increase 2007 GDP. C. The value of the cars in inventory will be counted as part of 2006 GDP, and the value of the cars sold in 2007 will increase 2007 GDP. D. The value of the cars in inventory will not affect 2006 GDP, and the value of the cars sold in 2007 will not increase 2007 GDP. 16. The consumer price index and the GDP deflator are two alternative measures of the overall price level. Which of the following statements about the two measures is correct? A. The CPI involves a base year; the GDP deflator does not involve a base year. B. The CPI can be used to compute the inflation rate; the GDP deflator cannot be used to compute the inflation rate, C. The CPI reflects the prices of goods and services produced domestically, the GDP deflator reflects the prices of all goods and services bought by consumers. D. The CPI reflects a fixed basket of goods and services, the GDP deflator (8 marks) reflects current production of goods and services. zelo Answers to Multiple Choice Question (write your answers cean) ii. 254 10.

Explanation / Answer

13. The correct answer is: A) equal to Marginal Revenue.

Reason: In a perfectly competitive market, the price is fixed. Thus the additional gain in total revenue by selling an additional unit of output is equal to the price of the product. Hence P=MR.

14. The correct answer is: C) $32.

Reason: As explained above, in a perfectly competitive market, P=MR(fixed). Hence, Price = $8. Thus Total revenue on selling 4 units = $4*8 = $32.

15. The correct answer is: A)

Reason: By definition, GDP accounts for all the goods and services produced in an economy during a particular year. Hence, goods produced in 2006 will be included in 2006 GDP and will not affect 2007 GDP.

16.

The correct answer is: D)

Reason: Option A is incorrect as both reflects a base year.

Option B is incorrect as both can be used to calculate inflation.

Option C is incorrect as actually CPI reflects all the goods and services bought by consumers and GDP deflator reflects all goods and services domestically produced.

Thanks!

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