Figure 2: http://tinypic.com/r/2mhg8d1/6 Refer to Figure 2 for questions 27-29.

Question

Figure 2: http://tinypic.com/r/2mhg8d1/6

Refer to Figure 2 for questions 27-29.
27) Identify the curves in the diagram.
A) E = average fixed cost curve; F = variable cost curve; G =
total cost curve, H = marginal cost curve
B) E = marginal cost curve; F = total cost curve; G = variable
cost curve, H = average fixed cost curve
C) E = average fixed cost curve; F = average total cost curve; G
= average variable cost curve, H = marginal cost curve
D) E = marginal cost curve; F = average total cost curve; G =
average variable cost curve; H = average fixed cost curve.


28) The vertical difference between curves F and G measures
A) average fixed costs. C) fixed costs.
B) marginal costs. D) sunk costs.

29) Curve G approaches curve F because
A) marginal cost is above average variable costs. C) fixed cost falls as capacity rises.
B) average fixed cost falls as output rises. D) total cost falls as more and more is produced.


Figure 4: http://tinypic.com/r/4u7ur8/6

Figure 4 shows cost and demand curves facing a typical firm in a
constant-cost, perfectly competitive industry. Answer questions 30-
34 accordingly.


30) If the market price is $20, what is the average profit at the profitmaximizing quantity?
A) $5 B) $6 C) $9 D) $20

31) What is the minimum price the firm requires to produce output?
A) $20 B) $14 C) $5 D) It cannot be
determined

32) If the market price is $20, the firm's profit-maximizing output is
_____ units. At this output level, the firm

Explanation / Answer

You cannot post two questions together. I have answered the 1st part question 27- 29 below. Please post questions 30-34 in a different post. 27) D) E = marginal cost curve; F = average total cost curve; G = average variable cost curve; H = average fixed cost curve. 28) A) average fixed costs 29) B) average fixed cost falls as output rises.

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