9) tr the price ce the pnduct increases, ceteris the pridit maximizingTirm will

Question

9) tr the price ce the pnduct increases, ceteris the pridit maximizingTirm will use of 9 the vanable input and produceof output A) moee: less t1) more; more C) less; less D) the same amount: the same amount ) none of the above 10) 0) Ir marginal revenue is above the minimum average total cost, then A) the firm will minimize its losses B) the firmm cannot maximize profit C) average fixed cost is zero D) the firm is earning economic profits E) none of the above 25 I 1) The demand curve facing the perfectly competitive firm A) is equal to the average variable costs of the firm in the rational range of production B) depends on the cost structure of the firm 28 D) is equal to the average revenue curve of the firm E) none of the above 12) 12) The total variable cost curve is a transformation of the A) marginal revenue curve B) marginal cost curve C) production function D) average fixed cost curve E) none of the above

Explanation / Answer

9. B. Increase in price makes producer to produce more to earn profits. To increase production, he needs to use more of variable input.

10. D. If mr is above atc, it means ar is also above atc as ar is always above mr. Hence, firm is making economic profit as price is more than cost

11. D. Perfectly competitive firm is price taker and faces horizontal demand curve which is equal to average revenue and marginal revenue.

12. E. Total variable cost depends upon quantity of production and is upward sloping.

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