Please give your answers to the study questions. If you are unsure, if you could provide a website or book for the information, this would be helpful.
The next 3 questions refer to the following:
Total cost schedule for a perfectly competitive firm:
Output Total Cost
0 $ 10
1 60
2 80
3 110
4 165
5 245
Question 1: If market price is $60, how many units of output will the firm produce?
a. Zero units of output because the firm shuts down.
b. 1 unit of output.
c. 2 units of output.
d. 3 units of output.
e. none of the above.
Question 2: If market price is $60, what is the maximum profit the firm can earn?
a. -$10
b. zero profit, the firm shuts down.
c. $75
d. $80
e. $85
Question 3: If market price is $30, how many units of output will the firm produce?
0, the firm shuts down
a. 1
b. 2
c. 3
d. 4
Question 4: Firm A and firm B both have total revenues of $200,000 and total costs of $250,000; firm A has total fixed costs of $40,000, while firm B has total fixed costs of $70,000. Which of the following statements are true in the short run?
a. Firm A should operate.
b. Firm B should operate.
c. Firm A should shut down.
d. Firm B should shut down.
e. Both b and c.
Question 5: Which of the following is NOT a characteristic of an increasing cost competitive industry? As the industry expands in the long run,
a. The price of product remains constant.
b. The prices of some inputs rise.
c. The cost of production increases.
d. the number of firms increase.
e. none of the above.