Question

A Screen Shot 2020-01-05 at 3.35.55 PM a Screen Shot 2020-01-05 at 3.42.45 PM Q Search Q Search (2) (23) Examine the graph below. If the price for this firm's product is $40, and the firm is maximizing profits, what is the firm's total revenue? Assume that the firm is a price taker. O $3750 Which of the following is not true about the slope of the total revenue curve for a perfectly competitive firm? It increases at a constant rate. $2000 O It is the marginal revenue. It is constant. It equals the price for a competitive firm. $6000 $10000 Price MC ATC ne 40 35 30 25 20 15 10 AVC (24) a Screen Shot 2020-01-05 at 3.42.50 PM Q Search 50 75 100 125 150 DS (26) The short-run market supply curve is constructed by the horizontal summation of of the individual firms the shut-down point. the marginal cost curves; below the marginal cost curves; above the average variable cost curves; below a Screen Shot 2020-01-05 at 3.36.06 PM a Search the average variable cost curves; above (11) If the price for a product falls below the All firms producing that product will shut down. lowest minimum marginal cost of all firms le producing that product, which of the following (27) All firms producing that product will cut production in half. statements is true? The most profitable firms producing that product will increase production and the rest will decrease production. All firms producing that product will increase production.

Answer 1

2.

Answer: $6,000

Since the firm is a price-taker, price would be equal to MC for maximizing profit. Therefore, price is $40 and its corresponding Q is 150 units.

Total revenue (TR) = P × Q

                                = $40 × 150

                                = $6,000

11.

Answer: 1^st option

This means that the price is so low that it doesn’t cover atleast the minimum of average variable cost (AVC), since the price is lower than MC. Therefore, it is better to shut-down there.

23.

Answer: 1^st option

The slope is constant that is equal to MR and price (P); TR = Price × Quantity.

In a perfectly competitive market, firms are price-taker but not price-setter. This indicates a fixed price in this market, where (AR = MR = D = P). Therefore, slope of TR can’t be increased in anyway.

26.

Answer: 2^nd option

Required supply curve of the market would be the summation of MC curves of all firms in this market and it will be above the shut-down point. The shut-down point is the minimum of average variable cost of an individual firm.