1. Total variable costs (Points : 1) initially increase as output increases and

Question

1. Total variable costs (Points : 1)
initially increase as output increases and then decrease.
always decrease with output.
always increase with output.
initially decrease and then increase with output.

6. In the short run (Points : 1)
existing firms do NOT face limits imposed by a fixed input.
all firms have costs that they must bear regardless of their output.
new firms can enter an industry.
existing firms can exit an industry.


7. Perfectly competitive firms must make all of the following decisions EXCEPT (Points : 1)
how much output to supply.
which production technology to use.
how much of each input to demand.
what price to charge for its output.



4. If revenues exceed ________, operating profit is ________. (Points : 1)
total cost; negative
fixed cost; positive
variable cost; negative
variable cost; positive



5. A firm will begin to experience diminishing returns at the point where (Points : 1)
marginal cost increases.
marginal cost decreases.
marginal product increases.
Both B and C

Explanation / Answer

1. Total variable costs (Points : 1) always increase with output. 6. In the short run (Points : 1) existing firms can exit an industry. 7. Perfectly competitive firms must make all of the following decisions EXCEPT (Points : 1) how much output to supply. 4. If revenues exceed ________, operating profit is ________. (Points : 1) fixed cost; positive 5. A firm will begin to experience diminishing returns at the point where (Points : 1) Both B and C

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