Question

21. In a competitive market the price is $8. A typical firm in the market has...

21. In a competitive market the price is $8. A typical firm in the market has ATC = $6, AVC = $5, and MC = $8. How much economic profit is the firm earning in the short run?

a.

$0 per unit

b.

$1 per unit

c.

$2 per unit

d.

$3 per unit

22. Consider a firm operating in a competitive market. The firm is producing 40 units of output, has an average total cost of production equal to $6, and is earning $240 economic profit in the short run. What is the current market price?

a.

$0

b.

$6

c.

$10

d.

$12

23. The short-run supply curve for a firm in a perfectly competitive market is

a.

horizontal.

b.

likely to slope downward.

c.

determined by forces external to the firm.

d.

the portion of its marginal cost curve that lies above its average variable cost.

24. Which of these curves is the competitive firm's short-run supply curve?

a.

the average variable cost curve above marginal cost

b.

the average total cost curve above marginal cost

c.

the marginal cost curve above average variable cost

d.

the average fixed cost curve
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