1 _ If a rm is maximizing its prots while earning normal prot, which of the following must be true? 0 Marginal revenue, total cost, and marginal cost are all equal. 0 Marginal revenue equals average total cost, and total revenue is maximized. O Marginal revenue equals marginal cost, and total cost equals total revenue. 0 Marginal revenue equals average total cost, and marginal cost is at its minimum. 0 Marginal revenue is greater than average total cost, and marginal cost is at its minimum. 2. A firm operating in a perfectly competitive market cannot increase its profit. Which of the following must be true in the short run? A decrease in output will leave profits unchanged. The firm cannot be earning positive economic profit. The firm's average total costs equal marginal costs. The firm's demand curve is downward sloping. The firm's marginal cost equals its price.3 The graph below shows the marginal revenue, marginal cost, and average total cost at different quantities for a rm in a perfectly competitive market. I MC 550 Pd\" $30 $20 SlO If this rm chooses to produce no output in the short run, what must the market price be? O Below $20 O $21 $30 0 $31 $40 O $41 $50 0 Above $50 A dairy farmer is operating in a perfectly competitive market. The market price for milk is between the farmer's average variable cost and average total cost at the protrmaximizing level of output. What will the farmer do? (2 points) O Produce more milk 0 Produce less milk 0 Shut down in the short run 0 Operate in the short run and leave the industry in the long run 0 Insufcient information to determine Consider the following cost schedule for a rm. Quantity Marginal Cost Average Total Cost Average Variable Cost 10 15 20 25 30 35 What is the economic prot or loss for a perfectly competitive rm if the market price is $26? (2 points) $12 $14 $16 $26 $30 $40 $32 $30 $23 $26 $23 $32 $24 $20 $1 6 $20 $24 $30 5. Which of the following would disqualify a firm's market from being considered perfectly competitive? (2 points) The firm has no market power. The firm sells a product that is indistinguishable from its competitors. The firm discovers a production cost-saving measure that competitors do not know. O The number of firms increases. The minimum efficient scale of the market goes from a very high to a lower level of output.Use the graph to answer the question below. The quantity is measured in thousands of units. (2 points) 6- 540 MC 3 '0 ATC AVC g 520 B P A 0 1 2 3 4 s 6 'r a 9 Qnamilzr - What will this rm decide to do in the long run? 0 It will stay in the market because the price is above its AVC at its prot-maximizing output. 0 It will leave the market because the price is below its ATC at its prot-maximizing output. 0 It will increase its price to point B to earn normal prot. 0 It will increase its output until its prot-maximizing output level is equal to B. 0 Insufcient data to determine