Q32. If marginal cost is less than marginal revenue, a firm should a. expand out

Question

Q32. If marginal cost is less than marginal revenue, a firm should
   a. expand output
   b. contract output
   c. maintain steady output
   d. shut down

Q33. The difference between the price firms would be willing to accept for their goods and the price they actually receive is called
   a. consumer surplus
   b. consumer efficiency
   c. allocative efficiency
   d. producer surplus

Q34. Under conditions of perfect competition, if profits are being made,
   a. new firms are attracted into the industry
   b. the market supply decreases
   c. average revenue increases
   d. new firms are excluded

Q35. A monopoly can sell all that it desires at any given price.
   a. true
   b. false

Explanation / Answer

ans 32

a. expand output

when we expand output , MC will increase and MR will decrease until MR=MC at equilibrium

ans 33

producer surplus

ans 34

a. new firms are attracted into the industry

ans 35

b)False.

A monopolist faces a downward-slopping demand curve. Hence, an increase in price means a drop in quantity sold.

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