Question

34. When total profit is maximized, marginal profit is equal to zero and marginal revenue is equal to marginal cost

Group of answer choices

True

False

35. An increase in supply (only) results in a higher equilibrium price and a higher equilibrium quantity.

Group of answer choices

True

False

36. At prices below the equilibrium price, quantity demanded is larger than quantity supplied, there is a shortage, and there is a pressure for price to increase.

Group of answer choices

True

False

Answer 1

34.

True.

Explanation :

Profit is maximized when marginal revenue is equals to marginal cost. Marginal profit equals to difference between marginal revenue and marginal cost.

So when profit is maximized marginal revenue and marginal cost are equal so, marginal profit is zero.

35.

False.

When supply increases, it shifts to the right along the demand curve. So, equilibrium price will decrease and quantity will increase.

36.

True.

Explanation :

Demand is downward sloping and supply is upward sloping. So when price is below equilibrium price, quantity demanded is higher than quantity supplied and there is shortage.