Chapter 21 Flashcards
A firm that produces at that output at which marginal cost = marignal revenue
- all the time
- most of the time
- some of the time
- on rare occasions
- none of the time
all the time
A consultant has advised Consolidated Fish, Inc. that it should cut back its production in order to increase its profits. We can conclude from this that
- CF’s total cost must be greater than its total revenues
- CF’s marginal cost must be greater than the price of its product
- fixed cost are not being covered and CF should shut down
- CF’s costs are increasing at a rate less than its revenues
CF’s marginal cost must be greater than the price of its product
To find the output at which the firm maximizes its profits you MUST know the firm’s
- ATC
- AVC
- AFC
- MC
MC
To maximize profits, a firm should produce at an output up to the point where
- the difference between price and marginal cost is at its maximum
- total cost equals total revenue
- price equals marginal cost
- total revenue equals variable cost
price equals marginal cost
When MC > MR, the firm should
- keep production unchanged
- increase production
- decrease production
- shut down
- go out of business
decrease production
If marginal cost is equal to marginal revenue
- the firm should expand output
- the firm should contract output
- the firm should hold output constant
- there is no way to determine if the firm should expand output, contract ouput or hold output constant
the firm should hold output constant
Marginal analysis is useful to a firm that seeks to
- maximize its profits, but not minimize its loses
- minimize its losses but not maximize its profits
- both maximize its profits and minimize its losses
- neither maximize its profits nor minimize its losses
both maximize its profits and minimize its losses
Which statement is true?
- The minimum point on the firm’s marginal cost curve is the shutdown point
- The minimum point on the firm’s marginal cost curve is the break–even point.
- The minium point on the firm’s average variable cost curve is the shutdown point
- The minimum point on the firm’s average total cost curve is the shutdown point
The minimum point on the firm’s average variable cost curve is the shutdown point
The lowest point on the firm’s long-run supply curve is
- the shutdown point
- the breakeven point
- between the shutdown point and the break even point
- none of the choices are the lowest point on the firm’s long run supply
The break even point
The minimum possible average total cost of a computer repair shop is $40.00 and the minimum possible average variable cost is $30.00. If you operate this shop, you will shut it down immediately if the equilibrium price of computer repairs falls below:
- $40.00
- $35.00
- $30.00
- $20.00
- $10.00
$30.00
Total revenue divided by output equals:
- marginal cost
- average total cost
- price
- average variable cost
- none of the choices are correct
Price
The lowest point on a firms short-run supply curve is
- breakeven point
- shutdown point
- most profitable output point
- lowest point on the marginal cost curve
shutdown point
The firm’s long run supply curve runs along its ________________curve
- ATC
- AVC
- MC
- MR
MC
Which curve tells us the output at which a firm is producing at peak efficiency
- AFC
- AVC
- ATC
- Demand
ATC
The firm’s break even point occurs at an output of:
- less than 44
- 44
- between 44 and 58
- about 58
- over 60
about 58
The firm’s shutdown point occurs at an output of
- less than 40
- 44
- 58
- 63
- 73
44
The firm’s most profitable output is at:
- 44
- 58
- 63
- 75
- 87
63
