6. If a competitive firm is (i) selling 1,000 units of its product at a price of

Question

6.
If a competitive firm is (i) selling 1,000 units of its product at a price of $9 per unit and (ii) earning a positive profit, then
A) its marginal revenue is less than $9.
B) its total cost is less than $9,000.
C) its average revenue is greater than $9.
D) All of the above are correct.
7.
Use the information in the table below to answer the following question


Quantity Price
1 13
2 13
3 13
4 13
5 13
6 13
7 13
8 13
9 13


The price and quantity relationship in the table is most likely that faced by a firm in a
A) monopoly.
B) strategic market.
C) competitive market.
D) concentrated market.
8.
Use the information in the table below to answer this question
Quantity Price
1 13
2 13
3 13
4 13
5 13
6 13
7 13
8 13
9 13
Over which range of output is average revenue equal to price?
A) 1 to 5
B) 5 to 9
C) Average revenue is equal to price over the whole range of output.
D) 3 to 7
9.
Use the information in the table below to answer this question
Quantity Price
1 13
2 13
3 13
4 13
5 13
6 13
7 13
8 13
9 13

Over what range of output is marginal revenue declining?
A) 1 to 6
B) 3 to 7
C) 7 to 9
D) None; marginal revenue is constant over the whole range of output.
10.
Use the information in the table below to answer this question
Quantity Price
1 13
2 13
3 13
4 13
5 13
6 13
7 13
8 13
9 13

If the firm doubles its output from 3 to 6 units, total revenue will
A) It cannot be determined from the information provided.
B) increase by exactly $39.
C) increase by more than $39.
D) increase by less than $39.
11.
Which of the following expressions is correct for a competitive firm?
A) Average revenue = Total revenue/Quantity of output.
B) Profit = Total revenue – Total cost.
C) All of the above are correct.
D) Marginal revenue = (Change in total revenue)/(Change in quantity of output).
12.
When price is greater than marginal cost for a firm in a competitive market,
A) the firm must be minimizing its losses.
B) marginal cost must be falling.
C) there are opportunities to increase profit by increasing production.
D) the firm should decrease output to maximize profit.
13.
A profit-maximizing firm will shut down in the short run when
A) price < average variable cost.
B) price < average total cost.
C) average revenue > average fixed cost.
D) average revenue > marginal cost.
14.
A firm’s short-run supply curve is part of which of the following curves?
A) marginal revenue
B) average variable cost
C) marginal cost
D) average total cost
15.
In the long run, a profit-maximizing firm will choose to exit a market when
A) average fixed cost is falling.
B) variable costs exceed sunk costs.
C) marginal cost exceeds marginal revenue at the current level of production.
D) total revenue is less than total cost.

Explanation / Answer

6. B) its total cost is less than $9,000. 7. C) competitive market. 8. C) Average revenue is equal to price over the whole range of output. 9. D) None; marginal revenue is constant over the whole range of output. 10. B) increase by exactly $39. 11. C) All of the above are correct. 12. C) there are opportunities to increase profit by increasing production. 13. A) price

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