#1 The distinction between the short run and the long run for a perfectly compet

Question

#1

The distinction between the short run and the long run for a perfectly competitive firm or a monopolist is that:

#2

Which of the following is not a characteristic of a perfectly competitive firms demand curve?
i. it is the same as the market demand curve
ii. it lies above the firms marginal revenue curve
iii. it is perfectly inelastic at all prices
iv. it is the same as the firms average revenue and marginal revenue curves

#3

Consider a perfectly competitive market described by the supply function P = 20 + 0.1Q and demand function P = 80 - 0.3Q. If the market is in equilibrium, then an individual firms total revenue (TR), average revenue (AR) and marginal revenue (MR) functions are:

#4

Suppose a perfectly competitive firm produces 40 units of output per-period (e.g., daily) and sells all units for the market price of $6. If average fixed cost is $2, average variable cost is $1, and marginal cost is $6, then the firm:
i. is maximizing total profit by producing and selling 40 units of output
ii. earns a per-period total profit of $120
iii. earns a per-period total profit of $240
iv. should close down in the short run and suffer a loss equal to $80

#5

In which of the following cases would a monopoly increase its per-period total profits by raising price and reducing output:

#6

For a purely competitive firm _______________; and for a uniform-price monopolist _______________ :

Explanation / Answer

1.A

2.A

3. D

4. if it run the firm with an output of 40 units, its total revenue will be= 40*6= 240, its total cost is 40*3= 120, and it it earns a paper profit of $120, option B is correct

5. in the case where the marginal revenue is higher than marginal cost, he will produce more output. so, option A is correct.

6. option C is correct

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