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True or False Quiz
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1
In a perfectly competitive market, all buyers and sellers are price takers.
A)True
B)False
2
Marginal revenue is the extra income a firm receives above break-even.
A)True
B)False
3
Profit maximization occurs at the output where marginal revenue equals zero.
A)True
B)False
4
A firm will not shut down in the short run so long as it is covering its variable costs.
A)True
B)False
5
In order to maximize its profits, a firm will produce an output at which the marginal revenue equals the marginal cost.
A)True
B)False
6
A firm will maximize its total profits at the output at which the difference between its average revenue and average cost is greatest.
A)True
B)False
7
The supply curve of the firm in perfect competition is that portion of the marginal cost curve above the average variable cost curve.
A)True
B)False
8
An increase in the demand for a product will cause many firms to leave the industry.
A)True
B)False
9
The long-run supply curve of an increasing cost industry is upward sloping.
A)True
B)False
10
The reason why the long-run supply curve is upward or downward sloping is the result of changes in production costs that accompany any change in the size of the industry.
A)True
B)False





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