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CHAPTER 2 MODELING THE MARKET PROCESS

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MC b. MR = MC c. TR > TC d. TR;= TC 19. If a perfectly competitive firm is a;profit-maximizer, it produces wherea. MR;MC b. P > MR c. P;= MC d. TR;= TC 20. If a firm is producing at an output level such that the MR is $550 and the MC is $780,a. the firm incurs a total loss of $230;b. the firm should contract;production because marginal profit is less than zero;c. M? is +$230;d. the firm should expand its output;level because its total revenue is rising by $550 21. Suppose that a company produces at a point where its MR is $430 and its MC is $105, this implies that a. the firm earns a total profit of $325;at that output level;b. the firm?s total costs are;rising faster than its total revenue;c. the firm?s total profit is;rising, suggesting that the firm should expand production;d. each unit of output generates;an average profit of $325 22. If a firm makes production decisions such that it achieves maximum;output from a fixed stock of resources, this means that this firm is;a. achieving allocative efficiency c. earning a normal profit;b. earning a positive economic;profit d. technically efficient 23. If demand for clean water is specified as P = 140 ? 2Q, and the;market price is $40, then consumer surplus at that price level isa. $2500 b. $3000 c. $1600 d. $50 24. Suppose that a producer?s supply curve is estimated to be P = 15 + 3Q and that the product is sold at P = $45. At this price level, the firm?s producer surplus isa. $2250 b. $150 c. $300 d. $10;="msonormal">

 

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