A firm in perfectly competitive industry is producing 50 units, its profit-maximising quantity. Industry price is £2 and total fixed costs and total variable cost are £25 and £40 respectively. The firm’s economic profit is ?

Related Mcqs:

1. If a competitive firm is producing a level of output where marginal revenue exceeds marginal cost the firm could increase profit if it ?

   A. decreased production
   B. maintained production at the current level
   C. temporarily shut down.
   D. increased production

2. Assume That the firms operate as purely competitive sellers (a purely competitive industry) In the long run, equilibrium price equals _________ quantity equals _________ and profits total _________?

   A. $100, 2 million barrels per day $60 million
   B. $80, 4 million barrels per day $70 million
   C. $60, 6 million barrels per day, $20 million
   D. $40, 8 million barrels per day, $0 million

3. If you were running a firm in a perfectly competitive industry, you would be spending your time making decisions on ?

   A. how much to spend on advertising?
   B. how much of each input to use?
   C. What price to charge
   D. none of these

4. For a firm operating in two markets and price discriminating the profit maximising condition is ?

   A. Marginal revenue in A= Price B
   B. Marginal revenue in A = Marginal revenue B = Price A = Price B
   C. Marginal revenue in A = Marginal revenue B = Marginal cost
   D. Marginal revenue in A = Marginal revenue B = Average cost

5. A profit maximising firm will invest up to the level of investment where ?

   A. The cost of borrowing equals the marginal efficiency of capital
   B. The cost of borrowing is greater than the marginal efficiency of capital
   C. The cost of borrowing is less then the marginal efficiency of capital
   D. The cost of borrowing equals the marginal propensity to consume

6. A profit maximising firm will employ labour up to the point where ?

   A. Marginal revenue = marginal product
   B. Marginal cost = marginal product
   C. Marginal revenue product = average cost of labour
   D. Marginal revenue product = marginal cost of labour

7. Assume that firms in an oligopoly are currently colluding to set price and output to maximise total industry profit. If the oligopolists are forced to stop colluding, the price charged by the oligopolists will _________ and the total output produced will __________?

   A. decrease; decrease
   B. increase; decrease
   C. decrease; increase
   D. increase; increase

8. Pricing to cover variable costs and some fixed costs as in the case of some automobile distributorships that sell below total costs is typical of which of the following pricing objectives ?

   A. current profit maximization
   B. product quality leadership
   C. Market share leadership
   D. Survival

9. If an economy moves from producing 10 units of A and 4 units of B to producing 7 As and 5Bs The opportunity cost of the 5th B is ?

   A. 7As
   B. 10As
   C. 3As
   D. 1A

10. For a perfectly competitive firm ?

    A. Price equals marginal revenue
    B. price is greater than marginal revenue
    C. price equals total revenue
    D. price equals total cost