1) According to the shut-down rule, a firm should shut down in the short run whenever- at the output level where MR=MC-___
A) total variable cost exceeds total revenue
B) total cost exceeds total revenue
C) total cost exceeds marginal cost
D) total fixed cost exceeds total revenue
E) total fixed cost exceeds total variable cost
2) No matter how large the loss, a firm should always stay open in the short run if its toal revenue is sufficient to cover the total variable cost of production. (TRUE/FALSE)
3) In the short run, profit maximization typically occurs where total revenue is at its maximum (TURE/FALSE)
4) The demand scedule faced by an artist for reproductions of one of his paintings is downward sloping as is the case for all imperfectly competitive firms. His marginal revenue falls as output rises because____
| Price |
Quantity Demand |
|
1,000
2,000
3,000
4,000
5,000
|
500
400
300
200
100 |
A) marginal cost is rising
B) the artist must lower the price on all reporductions in order to sell a larger quantity
C) total revenue is increasing at an increasing rate
D) the price is equal to marginal revenue
E) the artist works in a perfectly competive market
6) Economic profit is_____
A) the same as accounting profit
B) the difference between the firms total revenue and its explicit cost
C) the difference between the firms marginal revenue and marginal cost
D) None of these
7) Whenever marginal revenue is postive, increasing output by one unit will increase total revenue. TRUE/FALSE
8) Refer to the data in 8-1 in the text, derived from the demand curve facing the firm. For this firm, the profit maximizing output level is ____
A) 5
B) 6
C) 7
D) 4
E) None of these- the firm should shut down
9) The output level that maximizes profit is the same as the output level that maximizes total revenue. (TRUE/FALSE)