Microeconomics chapter chapter 14 (module 11) - Custom Scholars
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Microeconomics chapter chapter 14 (module 11)

question
What happens if a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost?
answer
A one-unit increase in output will increase the firm's profit.
question
When economists refer to a production cost that has already been committed and cannot be recovered, what term do they use?
answer
sunk cost
question
What will the entry of new firms into a competitive market do to market supply and market prices?
answer
It will increase market supply and decrease market prices.
question
Which one of the following describes when a rational entrepreneur should enter a competitive industry?
answer
P > ATC
question
When calculating marginal cost, what must the firm know at each level of output?
answer
variable cost
question
A competitive firm maximizes profit by choosing the quantity where its:
answer
marginal cost equals the price
question
When a firm in a competitive market receives $8000 in total revenue, it has a marginal revenue of $20. What is the average revenue, and how many units were sold?
answer
$20 and 400 units
question
What signals the entry and exit decisions of firms in a competitive market?
answer
profits and losses
question
If a profit-maximizing, competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, it will do which of the following? Draw the diagram before answering the question.
answer
keep producing in the short run but exit the market in the long run
question
When a firm in a competitive market produces 15 units of output, it has a marginal revenue of $8.00. What would be the firm's total revenue when it produces 8 units of output?
answer
$64.00
question
A competitive firm's short-run supply curve is its ___ cost curve above its ___ cost curve.
answer
marginal, average variable
question
When firms are said to be price takers, what will happen if a firm raises its price?
answer
Buyers will go elsewhere.
question
In the long-run equilibrium of a competitive market with identical firms, what is the relationship between price P, marginal cost MC, and average total cost ATC?
answer
P = MC and P = ATC.
question
Which one of the following situations should cause a firm to shut down in the short-run? It is not covering its:
answer
variable costs.
question
If the firm is making economic profit in the short-run, what will happen to the firm in the long run?
answer
More firms will enter the industry, thus driving down price until profit equals zero.
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question
What happens if a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost?
answer
A one-unit increase in output will increase the firm's profit.
question
When economists refer to a production cost that has already been committed and cannot be recovered, what term do they use?
answer
sunk cost
question
What will the entry of new firms into a competitive market do to market supply and market prices?
answer
It will increase market supply and decrease market prices.
question
Which one of the following describes when a rational entrepreneur should enter a competitive industry?
answer
P > ATC
question
When calculating marginal cost, what must the firm know at each level of output?
answer
variable cost
question
A competitive firm maximizes profit by choosing the quantity where its:
answer
marginal cost equals the price
question
When a firm in a competitive market receives $8000 in total revenue, it has a marginal revenue of $20. What is the average revenue, and how many units were sold?
answer
$20 and 400 units
question
What signals the entry and exit decisions of firms in a competitive market?
answer
profits and losses
question
If a profit-maximizing, competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, it will do which of the following? Draw the diagram before answering the question.
answer
keep producing in the short run but exit the market in the long run
question
When a firm in a competitive market produces 15 units of output, it has a marginal revenue of $8.00. What would be the firm's total revenue when it produces 8 units of output?
answer
$64.00
question
A competitive firm's short-run supply curve is its ___ cost curve above its ___ cost curve.
answer
marginal, average variable
question
When firms are said to be price takers, what will happen if a firm raises its price?
answer
Buyers will go elsewhere.
question
In the long-run equilibrium of a competitive market with identical firms, what is the relationship between price P, marginal cost MC, and average total cost ATC?
answer
P = MC and P = ATC.
question
Which one of the following situations should cause a firm to shut down in the short-run? It is not covering its:
answer
variable costs.
question
If the firm is making economic profit in the short-run, what will happen to the firm in the long run?
answer
More firms will enter the industry, thus driving down price until profit equals zero.
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