1. When we consider firm behavior, we assume that firms try to ___________. a)ma
ID: 1101651 • Letter: 1
Question
1. When we consider firm behavior, we assume that firms try to ___________.
a)maximize total revenue.
b)minimize total cost.
c)maximize market share.
d)maximize the difference between total revenue and total cost.
2. If at the current output level, a firms finds that its MR is less than its MC, the firm ________.
a) has maximized profit.
b) can increase profit by decreasing output.
c) can increase profit by increasing output.
d) can increase market share by increasing output.
3. Use the following diagram representing a perfectly competitive firm to answer the following question.
If Amber and Alice are the only suppliers in the market, the market quantity supplied at $4 and $10 respectively equal:
8 and 20.
14 and 19.
18 and 22.
13 and 20.
4. All of the following are characteristics of a perfectly competitive market except:
a) Sellers know all the profit opportunities and buyers know all the prices in the market .
b) Every buyer is a price taker and every seller is a price setter in the market.
c) Firms can enter and exit the market easily.
d) Buyers do not have any brand loyalty.
5. In a firm's production planning horizon, the "short-run" refers to
a period less than one year.
the period during which all of the firm's inputs are fixed.
the period during which all of the firm's inputs can be varied.
the period during which at least one of the firm's inputs is fixed.
6. A flower shop is currently running a loss of $1000/month. Its total revenue is $6000/month, fixed cost is $2500/month, and variable cost is $4500/month. This shop should ____________.
shut down immediately.
keep operating for a long time.
keep operating in the short run and consider leaving the business in the long run.
keep operating in the short run and then file for bankruptcy protection in the long run.
a)8 and 20.
b)14 and 19.
c)18 and 22.
d)13 and 20.
Explanation / Answer
1.d
2.b
3.d
4.a
5.d
6.c
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