A perfectly competitive firm shuts down in the short-run when the market price is less than the ...

A perfectly competitive firm shuts down in the short-run when the market price is less than the average variable cost.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 2

Under which of the following circumstances might a gallon of water be more valuable than a flawless one carat diamond?
 a. At a diamond shop next door to a clean public drinking fountain.
 b. At a diamond shop next door to a typical grocery store selling bottled water.
 c. In any U.S. city with safe, clean drinking water.
 d. In a life raft with 8 passengers who have been adrift on a remote part of the Pacific Ocean for a week with few prospects of an immediate rescue.

QUESTION 3

When faced with an economic loss, a competitive firm will shut down its operations in the short run.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 4

If total utility from consuming two cups of coffee is 20 utils, and if the total utility from consuming three cups of coffee is 25 utils, then which of the following is the marginal utility of the third cup of coffee?
 a. 0.
 b. 5.
 c. 10.
  d. 20.
  e. 25.

QUESTION 5

If a perfectly competitive firm cannot cover all of its costs, then it should shut down in the short run.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 6

Which of the following is true about marginal utility?
 a. Marginal utility is total utility divided by the total quantity consumed.
  b. Marginal utility is the change in total utility divided by the change in total quantity demanded.
  c. Marginal utility is the satisfaction that a consumer experiences from all the units of a good or service consumed.
  d. None of the above are true.

QUESTION 7

If a firm is producing an output level at which marginal revenue exceeds marginal cost in the short run, the firm will increase profits by reducing its output level.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 8

The fact that a gallon of gasoline commands a higher market price than a gallon of water indicates that:
 a. gasoline is an economic good but water is not.
  b. the marginal utility of gasoline is greater than the marginal utility of a gallon of water.
  c. the average utility of a gallon of gasoline is greater than the average utility of a gallon of water.
  d. the total utility of gasoline exceeds the total utility of water.

QUESTION 9

In the short run, the profit maximizing (or minimizing) quantity of output for any firm to produce exists at that output level at which marginal revenue equals marginal cost.
 a. True
  b. False
  Indicate whether the statement is true or false