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In the long run, ____ firms will ____ the industry so that the market supply curve shifts to the _____, until prices ______ sufficiently so that all firms make a normal profit only.
- A. new firms; enter; right; decrease.
- B. new firms; enter; left; increase.
- C. existing firms; exit; right; decrease.
- D. existing firms; exit; left; increase.
- Economists assume that the goal of the firm is to A. maximise profits.
- B. minimise implicit costs.
- C. break-even in the long run.
- D. maximise total revenue.
- A profit-maximising firm sells its product for R300, but continues to produce even though it is making a loss. This suggests that A. the average total cost is less than the price.
- B. the average variable cost is less than the price.
- C. the average fixed cost is less than the price.
- D. the marginal cost is less than the price.
- At what price should a firm produce to maximise profits in a perfectly competitive market? A. where price equals average revenue
- B. where price equals marginal revenue
- C. where price equals marginal cost
- D. where price equals total revenue
- A monopoly is a A. single buyer of raw materials.
- B. large number of producers each with a small share of the total market output.
- C. single seller of a product that has no close substitutes.
- D. small group of producers with similar products.
- A perfectly competitive firm is described as a market with A. a few buyers, many sellers and the production of differentiated goods.
- B. many buyers, many sellers and the production of homogenous goods.
- C. a few firms producing differentiated goods.
- D. a large number of firms that each individually sets the price of their goods.
- Which one of the following statements is incorrect? Under perfect competition A. firms may earn normal profit in the short run.
- B. firms may suffer economic losses in the short run.
- C. firms may earn economic profits in the short run.
- D. firms may earn an economic profit in the long run.
A profit-maximising firm sells its product for R300, but continues to produce even though it is making a loss. This suggests that
A. the average fixed cost is less than the price.
B. the average total cost is less than the price.
C. the average variable cost is less than the price.
D. the marginal cost is less than the price.
A firm's marginal revenue (MR)
- A. is equal to the total revenue divided by the quantity sold.
- B. is equal to ΔTR/ΔQ.
- C. is equal to (TR – TC)/Q.
- D. is equal to the price of its product multiplied by the quantity sold.
Which one of the following statements is incorrect? Under perfect competition
A. marginal revenue is always equal to the price of the product.
B. average revenue is always equal to the price of the product.
C. marginal revenue is always equal to marginal cost.
D. average revenue is always equal to marginal revenue.
