If in the short run, at the profit maximizing level of output, the average revenue curve of a competitive firm lies above the average cost curve then:
a. the firm is incurring losses.
b. the firm is just able to cover its total cost.
c. the firm enjoys above-normal profits.
d. the firm must shut down.
e. the firm is barely able to cover its variable costs.
QUESTION 2Perfectly competitive firms and monopolists are different because
a. in perfect competition MC = P, while a monopolist produces where P > MC.
b. in perfect competition MC = P, while a monopolist produces where MC > P.
c. in perfect competition P > MC, while a monopolist produces where MC = P.
d. in perfect competition MC > P, while a monopolist produces where MC = P.
QUESTION 3If international trade is restricted by the government of a country:
a. the domestic consumers are benefited.
b. the domestic producers are adversely affected.
c. the domestic consumers pay higher prices for imported goods.
d. the resources are equally distributed among domestic and foreign producers.
e. the resources are allocated to their highest paid uses.
QUESTION 4What is a production function?
QUESTION 5A perfectly competitive firm incurs a loss in the short run, if at the profit maximizing level of output:
a. the marginal revenue curve lies below the marginal cost curve.
b. the marginal revenue curve lies above the average revenue curve.
c. the average cost curve lies below the average revenue curve.
d. the average revenue curve lies below the average cost curve.
e. the marginal revenue curve lies above the marginal cost curve.
QUESTION 6Which of the following accurately describes a major difference between a monopolist and firms in perfectly competitive markets?
a. The monopolist maximizes profit; firms in perfectly competitive markets maximize sales.
b. The monopolist may earn long-run economic profit; firms in perfectly competitive markets cannot.
c. The monopolist is a price taker; firms in other markets are price searchers.
d. The monopolist may earn short-run profit; firms in perfectly competitive markets cannot.
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