At an output level above the profit-maximizing level, for a perfectly competitive firm, a reduction in output will:
a. reduce total revenue more than total cost.
b. reduce total cost more than total revenue.
c. increase total revenue more than total cost.
d. increase total cost more than total revenue.
e. decrease total revenue and total cost by the same amount.
QUESTION 2Which of the following best explains why marginal revenue for a monopolist is less than the sales price?
a. To sell more units, the monopolist must reduce price on all units sold.
b. As the monopolist expands output, the average total cost of production declines.
c. The monopolist charges each consumer the highest possible price.
d. When a firm has a monopoly, consumers have no choice other than to pay the price set by the monopolist.
QUESTION 3What is marginal cost?
QUESTION 4Generally speaking, protection from foreign competition benefits:
a. both domestic producers and foreign producers.
b. both domestic consumers and foreign consumers.
c. domestic consumers and foreign consumers.
d. neither domestic producers nor foreign producers.
e. domestic producers at the expense of domestic consumers.
QUESTION 5Suppose that in a perfectly competitive market, the market supply of a good increases. As a result, the individual firm's:
a. supply curve would shift outward and the firm would increase output.
b. supply curve would shift inward and the firm would decrease output.
c. average-total-cost curve would shift upward and the firm would increase output.
d. marginal-revenue curve would shift upward and the firm would increase output.
e. marginal-revenue curve would shift downward and the firm would decrease output.
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