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If an imperfectly competitive firm is producing a level of output where marginal cost is equal to marginal revenue, marginal revenue is below average variable cost, and the price is equal to the average total cost, then the firm is
A
In long-run equilibrium
B
In short-run equilibrium
C
Minimizing short-run average total cost
D
Breaking even
Correct Answer:
Minimizing short-run average total cost
Marginal cost is equal to marginal revenue, average cost is equal to average revenue, average revenue is equal to marginal revenue and average cost is equal to marginal cost. This is the condition of
1. long period equilibrium for a firm under monopoly
2. short period equilibrium for a firm under oligopoly
3. long period equilibrium
4. long period equilibrium for a firm under perfect competitions
Select the correct answer
A
Both 1 and 4
B
Both 3 and 4
C
Both 3 and 1
D
Only 1
The marginal cost is equal is to marginal revenue, the average cost is equal to average revenue, average revenue is equal to marginal revenue, and the average cost is equal to marginal cost. This is the condition of
1. Long-period equilibrium for a firm under monopoly.
2. Short-period equilibrium for a firm under oligopoly.
3. Long-period equilibrium
4. Long-period equilibrium for a firm under perfect competition.
A
1 and 4
B
3 and 4
C
1 and 3
D
Only 1
In perfect competition, when a firm is in short periods, for equilibrium, the following condition does apply
1. Marginal cost must equal marginal revenue.
2. Average cost must equal average revenue.
3. Marginal revenue must equal average revenue.
4. Marginal cost must equal average cost.
A
1, 2 and 3
B
1 and 3
C
2, 3 and 4
D
Only 3
"S produces and sells one product, P, for which the data are as follows:
Selling price Rs 28
Variable cost Rs 16
Fixed cost Rs 4
The fixed costs are based on a budgeted production and sales level of 25,000 units for the next period. Due to market changes both the selling price and the variable cost are expected to increase above the budgeted level in the next period. If the selling price and variable cost per unit increase by 10% and 8% respectively, by how much must sales volume change, compared with the original budgeted level, in order to achieve the original budgeted profit for the period?"
A
10.1% decrease
B
11.2% decrease
C
13.3% decrease
D
16.0% decrease
A monopolist produces 14,000 units of output and charges Rs. 14 per unit. Its marginal revenue is Rs. 8, its marginal cost is Rs. 7 and rising, its average total cost is Rs. 10, and its average variable cost is Rs. 9. The monopolist should
A
Increase output, which will increase the firm's positive economic profit
B
Increase output, which will reduce the firm's economic losses
C
Shut down, which will reduce the firm's economic losses
D
Decrease output, which will increase the firm's positive economic profit
In the short run, a monopolist will shut down if it is producing a level of output where marginal revenue is equal to the short-run marginal cost and price is
A
Greater than average total cost
B
Less than average total cost
C
Greater than average variable cost
D
Less than average variable cost
The total average cost of a firm on producing 5 units is Rs. 30/- and the average cost of producing 6 units is Rs. 32/-. The marginal cost of production of the sixth unit will be
A
Rs. 2
B
Rs. 12
C
Rs. 32
D
Rs. 42
Consider the following statements.
1. One way the government can induce a monopolist to expand his output is by imposing a price ceiling that make the monopolist lower his price.
2. MC = MR = AC = AR shows the equilibrium position of the competitive firm.
3. One way the government can induce a monopolist to expand his output by imposing a price floor that makes the monopolist raise his price.
4. One way the government can induce a monopolist to expand his output by imposing a specific tax on the monopolist output.
Which of the statement(s) given above is/are correct?
A
Both 1 and 2
B
Both 3 and 4
C
Only 2
D
1, 2 and 3
"It is now expected that the variable production cost per unit and the selling price per unit will each increase by 10%, and fixed production cost will rise by 25%. What will be the new break even point?
Selling price - Rs 6 per unit
Variable production cost - Rs 1.20 per unit
Variable selling cost - Rs 0.40 per unit
Fixed production cost - Rs 4 per unit
Fixed selling cost - Rs 0.80 per unit
Budgeted production and sales for the year are 10,000 units."
A
8,788 units
B
11,600 units
C
11,885 units
D
12,397 units
If for a perfectly competitive firm, price is Rs. 60, output is 300 units, average variable costs are Rs. 18, and average total costs are Rs. 36. The firm'sprofits are equal to
A
Rs. 5400
B
Rs. 3600
C
Rs. 7200
D
Rs. 1800