If an increase in output results in a decrease in average total cost, the corresponding marginal

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30.  If an increase in output results in a decrease in average total cost, the corresponding marginal

       cost is

a.      less than average total cost.

b.      greater than average total cost.

c.      less than average total cost and falling.

d.      less than average total cost and rising.

e.      equal to average cost.

 

31.  When a total product curve is increasing at an increasing rate, its corresponding marginal

product curve is

a.      vertical.

b.      horizontal.

c.      rising.

d.      falling.

e.      negative.

 

32.  When a total product curve is increasing at a decreasing rate, its corresponding marginal

       product curve is

a.      rising.

b.      falling.

c.      vertical.

d.      horizontal.

e.      negative.

 

33.  Perfect competition is characterized by

a.      many sellers and few buyers.

b.      many buyers and few sellers.

c.      heterogeneous products.

d.      incomplete resource mobility and market knowledge.

e.      many sellers and many buyers.

 

34.  A competitive firm maximizes profit at the output where its

a.      marginal cost equals price.

b.      marginal cost equals marginal revenue.

c.      marginal cost equals average revenue.

d.      marginal cost intersects the firm’s demand curve.

e.      all of these.

 

 

 

35.  If a firm in perfect competition sells 10 units of output at a market price of $5 per unit, its

       marginal revenue is

a.      $5.

b.      $50.

c.      $10.

d.      $.50.

e.      $55.

 

36.  When a firm’s total revenue exceeds its total cost

a.      average revenue is less than average total cost.

b.      total cost is declining with increases in output.

c.      marginal cost is negative.

d.      net revenue is negative.

e.      average revenue is greater than average total cost.

 

37.  When a firm’s total cost exceeds its total revenue

a.      average total cost exceeds its total revenue.

b.      net revenue is positive.

c.      marginal cost is negative.

d.      total cost is declining with increases in output.

e.      average total cost is greater than average revenue.

 

38.  At the output where a firm’s average total cost equals its average revenue, the firm is

a.      earning a normal profit.

b.      incurring an economic loss.

c.      earning an economic or pure profit.

d.      earning more than a break-even return.

e.      earning less than a break-even return.

 

39.  Under perfect competition, how does the elasticity of demand for the output of an industry compare with that of a firm

a.      both demand curves have the same elasticity.

b.      both demand curves are perfectly elastic.

c.      both demand curves are relatively elastic.

d.      the industry’s demand curve is perfectly elastic; the firm’s demand curve is less than perfectly elastic.

e.      the firm’s demand curve is perfectly elastic; the industry’s demand curve is less than perfectly elastic.

 

40.  At any level of output less than the most profitable one, an increase in output

a.      adds more to total cost than to total revenue.

b.      adds more to total revenue than to total cost.

c.      adds the same amount to total revenue as to total cost.

d.      adds to total revenue but not to total cost.

e.      adds total cost but not to total revenue.

 

41.  At any level of output greater than the most profitable one, a reduction in output

a.      decreases total cost more than total revenue.

b.      decreases total revenue more than total cost.

c.      decreases total revenue by the same amount as total cost.

d.      decreases total revenue but not total cost.

e.      decreases total cost but not total revenue.

 

 

 

 

42.  When a perfectly competitive industry is in long-run equilibrium, its firms are

a.      earning more than normal profit.

b.      combining their variable and fixed resources inefficiently.

c.      not in short-run equilibrium.

d.     allocating all their resources optimally.

e.      maximizing total revenue.

 

43.  At a firm’s most profitable level of output

a.      total revenue minus total cost is a maximum.

b.      marginal cost equals marginal revenue.

c.      net revenue is a maximum.

d.      all of the above.

e.      none of the above.

 

  • 7 years ago
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