When there is a competitive firm it will maximize profits at which output:

1. Total revenue and total cost are equal.

2. Total revenue exceeds total cost by the greatest amount.

3. Price exceeds average total cost by the largest amount.

4. The difference between marginal revenue and price is at a maximum.

Assume that QRS Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. This corporation:

1. Should close down in the short run.

2. Is maximizing its profits.

3. Is realizing a loss of $60.

4. Is realizing an economic profit of $40.

In a purely competitive industry:

1. There will be no economic profits in either the short run or the long run.

2. Economic profits may persist in the long run if consumer demand is strong and stable.

3. There may be economic profits in the short run, but not in the long run.

4. There may be economic profits in the long run, but not in the short run.

Assume a firm in a purely competitive market discovers that the price of its product is above its minimum AVC point but everywhere below ATC. The firm will

1. Minimizes losses by producing at the minimum point of its AFC curve.

2. Maximizes profits by producing where MR = ATC.

3. Should close down immediately.

4. Should continue producing in the short run.

In a constant-cost industry is one in which:

1. If 100 units can be produced for $100, then 150 can be produced for $150, 200 for $200, and so forth.

2. If 100 units can be produced for $100, then 150 can be produced for $300, 200 for $600, and so forth.

3. The demand curve and therefore the unit price and quantity sold seldom change.

4. The total cost of producing 200 or 300 units is no greater than the cost of producing 100 units.