Question 1: Answer the question on the basis the numerical example below:
|
Quantity
|
Price
|
Marginal Revenue
|
Average Fixed Cost
|
Average Variable Cost
|
Average Total Cost
|
Marginal Cost
|
|
0
|
152
|
|
|
|
|
|
|
1
|
142
|
142
|
100.00
|
138.30
|
238.30
|
138.30
|
|
2
|
132
|
122
|
50.00
|
124.20
|
174.20
|
110.10
|
|
3
|
122
|
102
|
33.33
|
112.70
|
146.03
|
89.70
|
|
4
|
112
|
82
|
25.00
|
103.80
|
128.80
|
77.10
|
|
5
|
102
|
62
|
20.00
|
97.50
|
117.50
|
72.30
|
|
6
|
92
|
42
|
16.67
|
93.80
|
110.47
|
75.30
|
|
7
|
82
|
22
|
14.29
|
92.70
|
106.99
|
86.10
|
|
8
|
72
|
2
|
12.50
|
94.20
|
106.70
|
104.70
|
|
9
|
62
|
-18
|
11.11
|
98.30
|
109.41
|
131.10
|
|
10
|
52
|
-38
|
10.00
|
105.00
|
115.00
|
165.30
|
Assuming this firm is a short-run profit-maximizer or loss-minimizer. which statement best describes its present situation?
a) It should shut down immediately.
b) It is incurring a loss but should continue operating in the short run.
c) It is earning only a normal profit.
d) It is earning above normal profit.
e) Insufficient data to answer this question.
Question 2: Answer the question on the basis the numerical example below:
|
Quantity
|
Price
|
Marginal Revenue
|
Average Fixed Cost
|
Average Variable Cost
|
Average Total Cost
|
Marginal Cost
|
|
0
|
152
|
|
|
|
|
|
|
1
|
142
|
142
|
100.00
|
138.30
|
238.30
|
138.30
|
|
2
|
132
|
122
|
50.00
|
124.20
|
174.20
|
110.10
|
|
3
|
122
|
102
|
33.33
|
112.70
|
146.03
|
89.70
|
|
4
|
112
|
82
|
25.00
|
103.80
|
128.80
|
77.10
|
|
5
|
102
|
62
|
20.00
|
97.50
|
117.50
|
72.30
|
|
6
|
92
|
42
|
16.67
|
93.80
|
110.47
|
75.30
|
|
7
|
82
|
22
|
14.29
|
92.70
|
106.99
|
86.10
|
|
8
|
72
|
2
|
12.50
|
94.20
|
106.70
|
104.70
|
|
9
|
62
|
-18
|
11.11
|
98.30
|
109.41
|
131.10
|
|
10
|
52
|
-38
|
10.00
|
105.00
|
115.00
|
165.30
|
Suppose this firm is operating in a perfectly competitive market as price taker. If the market price is $90, in the short run, this firm should
a) produce 8 units of output.
b) produce 9 units of output.
c) produce 7 units of output.
d) produce 0 units of output (i.e., shut down).
e) insufficient information to answer this question.
Question 3: Answer the question on the basis the numerical example below:
If the firm is a price-taker (operates in a perfectly competitive market), it would be earning an economic profit as long as the market price is greater than
a) $72.30.
b) $106.70.
c) $92.70.
d) Insufficient information to answer this question.