Question

14. Which of the following correctly describes a monopoly that has an economic break even?

Group of answer choices

At the output where MR = MC, the ATC curve is tangent to the demand curve.

At the output where MR = MC, the ATC curve dips below the demand curve.

At the output where MR = MC, the ATC curve is entirely above the demand curve.

At the output where MR = MC, the AVC curve is tangent to the demand curve.

At the output where MR = MC, the AVC curve is entirely above the demand curve.

15. The supply curve of a perfectly competitive firm is a portion of which curve?

Group of answer choices

marginal cost

average total cost

average variable cost

average fixed cost

total variable cost

Answer 1

Ans 14: The correct option is: At the output where MR = MC, the ATC curve is tangent to the demand curve.

Break even means Total Revenue = Total Cost or zero profit. So, when the above condition is fulfilled, the monopoly is said to be break even.

Ans 15: The correct option is: Marginal cost

In short run, for a perfectly competitive firm, the region of marginal cost curve that lies above the average variable cost curve is considered to be the short run supply curve for a perfectly competitive firm. This is because if prices goes below minimum of AVC, then firm will shut down itself.