If a firm in a competitive industry is making no profit but still producing, it must be

  If a firm in a competitive industry is making no profit but still producing, it must be the
                            case that

a. MC = MR > ATC

b. MC = MR

c. MC = ATC > MR

d. MC = MR = ATC

e. this situation is not possible

122.              Which of the following statements is false?

a. Profit is increasing when marginal revenue is greater than marginal cost.

b. Marginal cost is always decreasing.

c. Marginal and average total costs are equal at the most efficient production level.

d. The AFC and AVC curves cross.

e. The AFC and ATC curves do not cross.

123.              The Bumpy Ride Suspension company makes springs for bicycle seats. Currently the
                            springs sell for $5 each. Being profit maximizers, the company makes just enough
                            springs so that the marginal cost of the last spring produced is $5. Their average total cost
                            at that output is $3.50. If they currently produce 1,000 springs and the market price falls
                            by $1, approximately how much profit will be lost?

a. all of the profit will be lost

b. profit will fall by $1 per spring

c. there will be no loss of profit

d. more than $1,000 but less than $1,500

e. less than $1,000

124.              Wild Woman’s Wild Wilderness Adventures sells 1,000 vacation packages each year.
                            The average total cost of the packages is $450 and each package sells for $770. Annual
                            profit is

a. $230

b. $320

c. $2,300

d. $320,000

e. $3.2 million

125.              Entrepreneurs operate in which spheres of economic life?

a. c and e

b. education and training

c. production

d. accounting

e. markets

126.              Suppose an entrepreneur commits to a production schedule but underestimates the market
                            price for his products. What will be true about his current level of production?

a. Losses will be very high.

b. Marginal cost will be less than marginal revenue.

c. Marginal cost will be more than marginal revenue.

d. Average total cost will exceed price.

e. Total fixed costs will be too low.

127.              Suppose an entrepreneur commits to a production schedule but overestimates the market
                            price for her products. Which situation is not possible?

a. Price equals average total cost.

b. Losses are greater than if she shut down.

c. Total profit is positive.

d. Average variable cost is greater than marginal cost.

e. Total profit is zero.

128.              A fishing boat owner sells her entire catch of 8,000 fish and maximizes profit that is
                            equal to $4,000. Suppose fish prices increase and you are asked to calculate her profit
                            knowing that she now sells 10,000 fish. If fish prices increased by $1 per fish, what do
                            you need to know to calculate her new profit level?

a. average fixed cost

b. average variable cost

c. change in average total cost

d. marginal cost

e. average total cost

129.              A fishing boat owner sells her entire catch of 8,000 fish and maximizes profit that is
                            equal to $4,000. Suppose fish prices increase and she now sells 10,000 fish. If fish prices
                            increased by $1 per fish, what do you need to know to calculate her new average total
                            cost?

a. average fixed cost

b. change in average variable cost

c. change in total variable cost

d. how many fish she catches

e. how much profit is made

130.              A fishing boat owner sells her entire catch of 20,000 fish and maximizes profit that is
                            equal to $7,000. Suppose fish prices increase and you are asked to calculate her profit
                            knowing that she now sells 30,000 fish. If fish prices increased by $3 per fish, what can
                            you say about her new profit level?

a. profit > $90,000

b. profit

c. profit

d. profit > $67,000

e. profit > $10,500