Category: Profit Maximizing Under Perfect Competition And Monopoly

A. If TP is declining, then AP is negative
B. If AP = MP, then total product is at a maximum.
C. If AP exceeds MP then AP is falling
D. If AP is at a maximum, then MP is also,

A. no longer influences the amount demand of the firm’s product
B. becomes a decision variable for the firm
C. is guaranteed to be above a firm’s average cost.
D. is determined by the actions of other firms in the industry

A. 160; 270
B. 10; 30
C. 10; 3.33
D. 30; 10

A. a period where the law of diminishing returns does not hold.
B. at least one fixed factor of production and firms neither leaving nor entering the industry
C. all inputs being variable
D. no variable inputs – that is all of the factors of production are fixed

A. participants in a contestable market are continuously faced with competition or the threat of competition because entry is cheap
B. In a contestable market, economic profits cannot persist in the long run.
C. In a contestable market forces will guarantee that the firms produce efficiently or be driven out of business
D. For a market to be contestable, the product must be produced with a labor-intensive technology

A. sells a fixed amount of output regardless of price.
B. must raise price to sell more output
C. can sell an infinite amount of output at the market-determined price
D. must lower price to sell more output.

A. Fixed costs are zero if the firms is producing nothing.
B. Fixed costs are the difference between total costs and total variable costs
C. There are no fixed costs in the long run
D. Fixed costs do not depend on the firm’s level of output

A. the efficient output level will be produced in the long run
B. firms will only earn a normal profit
C. firms realize all economies of scale
D. firms will be producing at minimum average cost

A. In monopolistic competition, there are too many firms and each firm produce a slightly different product at a scale that is less than optimal
B. In monopolistic competition there are too few firms and each firm produce a slightly different product at scale that is greater than optimal
C. in monopolistic competition there is the correct number of firm and each firm produces a slightly different product at an optimal scale.
D. In monopolistic competition there are too many firms and each firm produce a slightly different product at the optimal scale

A. the difference between total revenue and total costs.
B. anything greater than the normal opportunity cost of investing
C. the opportunity costs of all inputs
D. a rate of profit that is just sufficient to keep owners and investors satisfied