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2119181-ECO

# 2119181-ECO - 3 Charlene sells cotton candy The cotton...

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3. Charlene sells cotton candy. The cotton candy industry is competitive. Charlene hires a business consultant to analyze her company’s financial records. The consultant recommends that Charlene increase her production. The consultant must have concluded that Charlene’s Answer total revenues exceed her total accounting costs. marginal revenue exceeds her total cost. marginal revenue exceeds her marginal cost . marginal cost exceeds her marginal revenue. 5. Refer to the following table: Total cost schedule for a competitive firm: Output Total Cost 0 \$ 10 1 \$ 60 2 \$ 80 3 \$110 4 \$165 5 \$245 If market price is \$60, how many units of output will the firm produce? Answer Zero units of output because the firm shuts down. 1 unit of output. 2 units of output. 3 units of output. none of the above. 6. Refer to the following table: Total cost schedule for a competitive firm: Output Total Cost 0 \$ 10 1 \$ 60

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2 \$ 80 3 \$110 4 \$165 5 \$245 If market price is \$60, what is the maximum profit the firm can earn? Answer −\$10 Zero profit \$75 \$80 \$85 7. Refer to the following table: Total cost schedule for a competitive firm: Output Total Cost 0 \$ 10 1 \$ 60 2 \$ 80 3 \$110 4 \$165 5 \$245 If market price is \$30, how many units of output will the firm produce? Answer 0, the firm shuts down 1
2 3 4 8. In a perfectly competitive industry the market price is \$25. A firm is currently producing 10,000 units of output; average total cost is \$28, marginal cost is \$20, and average variable cost is \$20. The firm should Answer raise price because the firm is losing money. keep output the same because the firm is producing at minimum average variable cost. produce more because the next unit of output increases profit by \$5. produce less because the next unit of output decreased profit by \$3. shut down because the firm is losing money. 9. The graph shows demand and marginal cost for a perfectly competitive firm. If the firm is producing 100 units of output, increasing output by one unit would ______ the firm’s profit by \$______.

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2119181-ECO - 3 Charlene sells cotton candy The cotton...

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