14) A firm\'s total revenue is equal to A) total quantity produced times margina
ID: 1161193 • Letter: 1
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14) A firm's total revenue is equal to A) total quantity produced times marginal cost B) total quantity produced times market price C) marginal revenue times total quantity produced D) market price divided by total quantity produced 15) A firm's marginal revenue is defined as A) the ratio of total revenue to total quantity produced B) the additional output produced by lowering price C) the additional revenue received due to technical innovation D) the additional revenue received when selling one more unit of output 16) In order to maximize profits, a firm should produce at the output level for which (A) average cost is minimized (B) marginal revenue equals marginal cost (C) marginal cost is minimized (D) price minus average cost is as large as possible 17) Which of the following statements is true regarding perfect competition? A) Only a small number of firms control the market B) Firms produce heterogeneous products to attract consumers C) Firms can freely enter or exit the market in the long run D) Firms have enough market power to set the market price at a high level to get profits (18) In order to realize profit maximization, a firm in the perfectly competitive market should produce (A) where average variable costs are minimized (B) where marginal cost is equal to average variable costs (C) where marginal cost is equal to price (D) where marginal cost is a minimum 19) Which of the following statements is true? A) Price is higher than marginal revenue in the perfectly competitive market B) The marginal product of a certain input keeps increasing as more input is added C) When marginal product of a certain input decreases, total product also decreases D) Profit maximization requires MR-MC. 20) Suppose there are two inputs for production: labor and capital. The price of labor is $2 and the price of capital is $1. There are four combinations of labor and capital: (4,2), (4.5,1), (3,4) and (2,6). Which of the combinations would generate the same production costs? A) (4,2) and (3,4) B) (4,2) and (2,6) C) (4.5, 1), (3,4) and (2,6) D) All of them generate the same production costsExplanation / Answer
ANSWER : 14 ) B ) Total quantity produced time market price . Total revenue is defined as the total amount of earning by selling of goods at particular price .
15 ) D) Additional revenue received when selling one more unit of output . Marginal revenue is defined as an additional revenue when an additional product are sell .
16) B) Marginal revenue equal to marginal cost .
17 ) C ) Firms can freely enter or exit in the market in the long run . It is a basic features of perfect competition .
18 ) C) Where marginal cost equal to price . Price is given in perfect competition market so it is equal to MR so profit maximization condition is MC=P .
19 ) D ) profit maximization requires MR=MC is ture statement and other option are false .
20 ) D) all of them generate the same production costs .
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