1)Refer to the above figure. The curve represents a A) average total cost curve.
ID: 1097753 • Letter: 1
Question
1)Refer to the above figure. The curve represents a
A) average total cost curve. B) total cost curve. C) marginal product curve.
D) total product curve.
2) The marginal cost curve intersects
A) the average total cost curve at its maximum.
B) the minimum of the average variable cost and average total cost curves.
C) the average fixed cost curve at its minimum.
d) the minimum of the average fixed cost, average variable cost and the average total cost curves.
3) In the long run
A) all costs are variable costs
B) variable costs will initially increase and then decrease.
C) the law of diminishing marginal product holds.
D) variable costs will equal marginal cost at all output levels.
4) The number of firms in a monopolistically competitive industry means that
A) firms will try to set a common price.
B) firms will collude.
C) firms will not cooperate to set a pure monopoly price.
D) existing firms in the industry will make sure new firms do not enter.
5) When firms make short-run profits in monopolistic competition, we expect to see
A) new firms trying to enter the industry, but unable to do so because of barriers to entry.
B) existing firms altering their scale of plant to try to capture larger profits. The combined effect is to cause all firms to make zero profits.
C) existing firms increasing prices to try to capture larger profits.
D) new firms entering the industry, shifting the demand curves of the existing firms to the left until firms make zero profits.
6) For a firm to be economically efficient from society's point of view it should produce where
A) average total cost equals price.
B) marginal cost equals average total cost.
C) marginal cost equals price.
D) marginal cost equals marginal revenue.
1)Refer to the above figure. The curve represents a A) average total cost curve. B) total cost curve. C) marginal product curve. D) total product curve. 2) The marginal cost curve intersects A) the average total cost curve at its maximum. B) the minimum of the average variable cost and average total cost curves. C) the average fixed cost curve at its minimum. d) the minimum of the average fixed cost, average variable cost and the average total cost curves. 3) In the long run A) all costs are variable costs B) variable costs will initially increase and then decrease. C) the law of diminishing marginal product holds. D) variable costs will equal marginal cost at all output levels. 4) The number of firms in a monopolistically competitive industry means that A) firms will try to set a common price. B) firms will collude. C) firms will not cooperate to set a pure monopoly price. D) existing firms in the industry will make sure new firms do not enter. 5) When firms make short-run profits in monopolistic competition, we expect to see A) new firms trying to enter the industry, but unable to do so because of barriers to entry. B) existing firms altering their scale of plant to try to capture larger profits. The combined effect is to cause all firms to make zero profits. C) existing firms increasing prices to try to capture larger profits. D) new firms entering the industry, shifting the demand curves of the existing firms to the left until firms make zero profits. 6) For a firm to be economically efficient from society's point of view it should produce where A) average total cost equals price. B) marginal cost equals average total cost. C) marginal cost equals price. D) marginal cost equals marginal revenue.Explanation / Answer
1. D As total product curve is usually concave downwards
2 B
3 A As Fixed costs = 0
4 D as free entry is a problem
5 D as it becomes perfect competition in the long run
6 A so that output is maximum and profits are normal for firm
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