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If a firm shuts down in the short run, it will a. incur losses equal to its fixed costs

 If a firm shuts down in the short run, it will

a. incur losses equal to its fixed costs

b. produce at the output level where MR = MC

c. reduce its losses to zero

d. do this because P > AVC

e. have total revenue greater than total fixed costs

92.              Suppose the price of a product is less than its average variable cost. When the firm’s
                            fixed obligations are completely ended, it will now most likely

a. make an economic profit

b. go out of business

c. expand to a bigger operation

d. continue to be shut down

e. break even

93.              If price equals average total cost, then total revenue

a. equals total cost

b. equals total fixed cost

c. equals total variable cost

d. is greater than total cost

e. equals marginal revenue

94.              If price is greater than average variable cost, then the firm

a. should cease production

b. earns economic profits

c. just breaks even

d. makes an economic loss

e. may make either an economic profit or loss

95.              When a business finds its obligations are ended,

a. all costs are variable costs

b. this is the short run

c. the market price of the output rises

d. the marginal cost curve shifts up

e. it may have to continue operations to minimize losses

96.              A doorknob manufacturer sells 400 doorknobs at a price of $10 each. It has total costs of
                            $4,500, of which $700 are fixed costs. This means the firm

a. has an economic profit of $500

b. should produce in the short run at a loss

c. should shut down in the short run

d. has total variable costs of $500

e. has price less than average variable cost

97.              A custom paper company finds that when the price of paper is $5, its total revenues are
                            $60,000. Its total costs are $70,000, of which $57,000 are variable costs. From this we
                            can infer

a. the firm sells 14,000 units of paper

b. economic profit is $10,000

c. the firm should shut down in the short run

d. total fixed costs are $3,000

e. price is greater than average variable cost

98.              The neighborhood ice cream shop finds that when it charges $3 per ice cream cone, its
                            total revenues are $90,000. It has total variable costs of $30,000 and total fixed costs of
                            $40,000. From this we can infer the

a. shop should be moved because the rent is too high

b. price is less than average total cost

c. economic profits are $20,000

d. shop will be closed in the long run

e. shop sells 10,000 ice cream cones

99.              If a firm is operating at a loss in the short run and finds that its price is greater than
                            average variable cost, then in the short run

a. it should produce where MR = MC

b. it should produce zero output

c. it should go out of business

d. total revenue is less than total variable costs

e. total revenue is greater than total costs

100.              Who conducted the study in the 1940s that surveyed entrepreneurs to determine whether
                            they used marginal analysis in choosing their production levels?

a. Milton Friedman

b. Fritz Machlup

c. Michael Kalecki

d. Richard Lester

e. R. L. Hall

Dec 09 2019 View more View Less

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