Answer t e r 23 average cost is the cost of producing

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ANSWER T, E, R 23. Average cost is the cost of producing the next unit. ANSWER F, E, R 24. Marginal cost curves and average cost curves are both purely upward sloping. ANSWER F, M, R 25. Marginal cost is defined by the slope of the total revenue curve. ANSWER F, E, R 26. If marginal cost is less than average cost, average cost must fall when more units are produced. ANSWER T, M, A
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Chapter 7/Output, Price, and Profit: The Importance of Marginal Analysis 233 27. If marginal cost of an additional unit of output is greater than average cost, then average cost will  rise. ANSWER T, M, A 28. If marginal cost is rising, then average cost must be rising. ANSWER F, M, A 29. If average cost is falling, then marginal cost must be falling. ANSWER F, M, A 30. Average cost equals total cost multiplied by the number of units of output. ANSWER F, E, A 31. Total cost equals average cost multiplied by the quantity of output. ANSWER T, M, A 32. A firm that sells at a price below average cost is losing money. ANSWER T, M, A 33. If total profit is at a maximum, then average profit is zero. ANSWER F, M, A 34. Given total cost and the quantity of output, marginal cost and average cost can be determined. ANSWER T, E, I 35. Profits will be maximized when the slope of the total revenue curve and the slope of the total cost  curve equal zero. ANSWER F, M, A 36. Profits will be maximized when the slope of the total revenue curve and the slope of the total cost  curve are equal. ANSWER T, M, A 37. Total profit is represented by the vertical distance between a total revenue curve and a total cost  curve. ANSWER T, M, A 38. A graph of total profits is always likely to be positively sloped throughout its length. ANSWER F, E, A MARGINAL ANALYSIS AND MAXIMIZATION OF TOTAL PROFIT 39. If the average cost of a product is $10 per unit and the price is $5, the firm is losing money. ANSWER T, M, A 40. Marginal profit is the slope of the total profit curve. ANSWER T, E, A 41. An optimal level of output is one at which marginal profit > 0. ANSWER F, M, A
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234 Chapter 7/Output, Price, and Profit: The Importance of Marginal Analysis 42. A firm should keep producing output as long as the marginal profit is greater than zero, no matter  how small it is. ANSWER T, M, A 43. Marginal profit equals the difference between marginal revenue and marginal cost. ANSWER T, E, A 44. Marginal profit equals the difference between marginal revenue and average cost.
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