Answer the following statements true (T) or false (F)
1) If the market price is $2 and a perfectly competitive firm is producing 1,000 units and the marginal cost to produce the 1,000th unit is $2, the difference between marginal revenue and marginal cost (MR - MC) is zero.
2) Overexpansion can bankrupt a perfectly competitive firm.
3) If the market price is $3 and a perfectly competitive firm is producing 1,400 units and the marginal cost to produce the 1,400th unit is $2, the difference between marginal revenue and marginal cost (MR - MC) is zero.
4) If the market price is $1 and a perfectly competitive firm is producing 1,500 units and the marginal cost to produce the 1,500th unit is $2, the difference between marginal revenue and marginal cost (MR - MC) is negative.
5) If the market price is $4 and a perfectly competitive firm is producing 1,500 units and the marginal cost to produce the 1,500th unit is $3.50, the difference between marginal revenue and marginal cost (MR - MC) is negative.
1) TRUE
2) TRUE
3) FALSE
4) TRUE
5) FALSE
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In a competitive market, excess demand for a good exists whenever
a. the current price is below the equilibrium price b. resources are scarce c. the quantity supplied at the current price exceeds the quantity demanded d. sellers are subject to the constraints imposed by input prices and technology e. the current price is above the equilibrium price
Setting a fair price means
a. c and e b. lowering the price until the monopolist says "unfair" c. pricing at the point where average fixed and average variable costs sum to the price d. imposing unreasonable restrictions on the price making capability of competitive firms e. pricing as if the market were actually competitive
Aaron gave up a job in a tire shop that paid $20,000 a year to start his own T-shirt business. The T-shirt company has the following revenues and costs: TR = $60,000 . cost of hiring employees = $40,000 . cost of materials = $8,000 . cost of rent and insurance = $6,000 . According to these data, Aaron's business made a(n)
a. economic profit of $6,000 b. normal profit of $6,000 c. economic loss of $6,000 d. economic loss of $14,000 e. normal profit of $14,000
There is widespread ____ about the causes of poverty and widespread _____ about how to alleviate poverty.
A. agreement; agreement. B. disagreement; disagreement. C. agreement; disagreement D. disagreement; agreement.