Which of the following statements best expresses a firm"s profit-maximizing decision rule? If marginal revenue is greater than marginal cost, the firm should increase its output. If marginal revenue is less than marginal cost, the firm should shut down in the short run. If marginal revenue equals marginal cost, the firm should produce exactly one more unit of output. All of the above are correct.

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A firm has market power if it can maximize profits. minimize costs. influence the market price of the good it sells. hire as many workers as it needs at the prevailing wage rate.
For any competitive market, the supply curve is closely related to the preferences of consumers who purchase products in that market. income tax rates of consumers in that market. firms" costs of production in that market. interest rates on government bonds.
A key characteristic of a competitive market is that government antitrust laws regulate competition. producers sell nearly identical products. firms minimize total costs. firms have price setting power.
Which of the following is not a characteristic of a perfectly competitive market? Firms are price takers. Firms have difficulty entering the market. There are many sellers in the market. Goods offered for sale are largely the same.
Free entry means that the government pays any entry costs for individual firms. no legal barriers prevent a firm from entering an industry. a firm"s marginal cost is zero. a firm has no fixed costs in the short run.
Why does a firm in a competitive industry charge the market price? If a firm charges less than the market price, it loses potential revenue. If a firm charges more than the market price, it loses all its customers to other firms. The firm can sell as many units of output as it wants to at the market price. All of the above are correct.
Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to increase. remain unchanged. decrease by less than 20 percent. decrease by more than 20 percent.
Which of the following statements regarding a competitive market is not correct? There are many buyers and many sellers in the market. Firms can freely enter or exit the market. Price equals average revenue. Price exceeds marginal revenue.
If a firm in a perfectly competitive market triples the quantity of output sold, then total revenue will more than triple. less than triple. exactly triple. Any of the above may be true depending on the firm"s labor productivity.
#11Refer to Table 14-3. For a firm operating in a competitive market, the price is $0. $7. $14. $21.
#12Refer to Table 14-3. For a firm operating in a competitive market, the marginal revenue is $0. $7. $14. $21.
Firms operating in competitive markets produce output levels where marginal revenue equals price. average revenue. total revenue divided by output. All of the above are correct.
#14Refer to Figure 14-1. The firm"s short-run supply curve is its marginal cost curve above $1. $3. $4.50. $6.30.

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#15Refer to Figure 14-1. If the market price falls below $4.50, the firm will earn positive economic profits in the short run. negative economic profits in the short run but remain in business. negative economic profits in the short run and shut down. zero economic profits in the short run.
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