In a perfectly competitive market, in the long run, the marginal cost of a firm

Question

In a perfectly competitive market, in the long run, the marginal cost of a firm becomes equal to its minimum average total cost. A) True B) False 2.Generally, The price a firm charges for its product is equal to its total revenue divided by the number of units sold. A) True B) False 3.In a perfectly competitive firm to maximize profit a firm must make sure that the price it charges does not exceed its marginal cost. A) True B) False 4.Firms in a competitive market can never make economic profits while they may make biasness (accounting) profits. A) True B) False 5.When a perfectly competitive firm is making a positive economic profit its average revenue must be greater than its average total cost. A) True B) False 6.To maximize its profit a firm always produces at the quantity level where it can charge the highest price and earn the greatest revenue; this strategy is consistent with setting is MC equal to price. A) True B) False 7.When a firm in a competitive market is making a positive economic profit its business profit may be positive or negative. A) True B) False 8.In a perfectly competitive market new entries could result in increases in input prices thus making production costs go up. A) True B) False 9.In a perfectly competitive market, in the long run, each firm produces the maximum amount it can produce and charges the lowest price possible. That is why we consider competitive markets efficient. A) True B) False 10.A monopolist always under-produces and charges a price higher than its MC. A) True B) False

Explanation / Answer

True False True True False False True True False False

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