working-problems - Some of you are struggling with the...

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Some of you are struggling with the multiple choice sections. Some of the multiple choice questions involve simple definitions or memorization of a concept, which you can answer from reading the notes. In other cases, though, you can't get the answer that way. You have to work a little problem first. Below, I've demonstrated how to work a couple of multiple choice questions of this sort. These examples are not all inclusive of the types of problems you will find on exam 3. They are meant to illustrate the problem-solving steps you'd need to take to answer a question that involves working a problem. Sample problem: A firm in a perfectly competitive industry finds that at the point where output price =MC, its total revenue is $3200. Total variable costs are $2500, and total fixed costs are $800. This firm should: A) shut down in the short run. B) produce at this level because it will realize a profit. C) produce at this level because the resulting loss is less than fixed costs. D) increase production. E) cut back production. Before selecting an answer, you have to work out some information that is not stated.
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This note was uploaded on 11/15/2011 for the course AGEC 7100 taught by Professor Duffy,p during the Fall '08 term at Auburn University.

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working-problems - Some of you are struggling with the...

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