Question 23: A firm in a perfectly competitive industry is producing 100 units,

Question

Question 23: A firm in a perfectly competitive industry is producing 100 units, ts profit-maximizing quan Industry firm's economic profits is: ?? price is 2AED, total fixed costs are 110AED and total variable costs are 60AED.The pret (AR - ATC A. 80AED 140AED 2-(10 2-12 C.)30AED 50AED A1C: AFCANC 2. Question 24: If market perfectly competitive firm is exceeds AVC but is smaller than ATC, at the profit-maximizing level of output, a Making profit B.) Incurring a loss but should continue to produce in the short run C. Incurring a loss and should stop producing immediately D. Breaking even Question 25: If a monopolist's total revenue function is given by, TR 4000 20then the monopolist' s marginal revenue function is given by: A. MR 400Q 2Q B. MR= 4000-40 C. MR 400- 4Q MR 400-2Q

Explanation / Answer

Q 23.

Economic Profit = Total Revenue- (Explicit+Implicit costs)

Total Revenue= 100 * 2AED= 200AED

TFC=110AED

TVC=60AED

Total explicit costs= 170AED

Economic Profit = 200AED-170AED=30AED

q.24

B. If P=minimum AVC (Shutdown point) the firm is indiifferent to produce or not to produce in the short run. Even if the firm produces, it will make a loss as P < AC. In the long run, P= Minimum AC.

Q25

Marginal revenue is the change in revenue due to an additional unit of output.

Answer is C.

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