1. Which of the following production levels will maximize profits in the short run for a...

1. Which of the following production levels will maximize profits in the short run for a purely competitive firm?

A. MR<MC

B. MC=ATC

C. MR=MC

D. MR=AVC

2. Focusing on the ability of a firm to get in or out of an industry entirely would focus on what type of economic time frame?

A. Production run

B. Long run
C. Entry run

D. Short run

3. Which of the following best describes demand for an individual firm in a perfectly competitive market structure?

A. Perfectly inelastic
B. Perfectly elastic
C. Perfectly differentiated

D. Perfectly standardized

4. Which of the following definitions is correct?

A. Accounting profit + implicit costs = economic profit
B. Economic profit – accounting profit = explicit costs
C. Economic profit – implicit costs = accounting profits

D. Accounting profit + economic profit = normal profit

Solutions

Expert Solution

The answers to above questions are as follows:

1. Which of the following production levels will maximize profits in the short run for a purely competitive firm?

D. MR=AVC is the production level that will maximize profits in the short run for a purely competitive firm.However the condition for profit maximization for perfectly competitive firms is P=MR=MC.

2.. Focusing on the ability of a firm to get in or out of an industry entirely would focus on what type of economic time frame?

B. Long Run is the time period when a firm would take the decision to get in or out of an industry entirely since the scale of production is fixed in the short run.

3. Which of the following best describes demand for an individual firm in a perfectly competitive market structure?

B. Perfectly Elastic

4. Which of the following definitions is correct?

C. Economic profit – implicit costs = accounting profits

Rahul Sunny answered 8 months ago

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