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29. A purely competitive firm's short-run supply curve is: 

B. upsloping and equal to the portion of the marginal cost curve that lies above the average variable cost curve.

30. Suppose you find that the price of your product is less than minimum AVC. You should: 

C. close down because, by producing, your losses will exceed your total fixed costs.

31. If a purely competitive firm shuts down in the short run: 

C. it will realize a loss equal to its total fixed costs.

32. A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its: 

A. total variable costs.

33. Refer to the above data. This firm is selling its output in a(n): 

C. purely competitive market.

34. Refer to the above data. If the firm's minimum average variable cost is $10, the firm's profit-maximizing level of output would be: 

B. 3.

35. Refer to the above data. At the profit-maximizing output the firm's total revenue is: 

A. $48.

36. Refer to the above data. At the profit-maximizing output the firm's total cost is: 

B. $32.

37. Refer to the above data. The firm's: 

B. economic profit is $16.

38. If a firm is confronted with economic losses in the short run, it will decide whether or not to produce by comparing: 

B. price and minimum average variable cost.

39. The lowest point on a purely competitive firm's short-run supply curve corresponds to: 

B. the minimum point on its AVC curve.

40. Refer to the above diagram for a purely competitive producer. The lowest price at which the firm should produce (as opposed to shutting down) is: 

B. P2.

41. Refer to the above diagram for a purely competitive producer. The firm will produce at a loss at all prices: 

D. between P2 and P3.
42. Refer to the above diagram for a purely competitive producer. If product price is P3

C. economic profits will be zero.

43. Refer to the above diagram for a purely competitive producer. The firm's short-run supply curve is: 

B. the bcd segment and above on the MC curve.

44. Refer to the above diagram. To maximize profit or minimize losses this firm will produce: 

C. E units at price A.

45. Refer to the above diagram. At the profit-maximizing output, total revenue will be: 

A. 0AHE.

46. Refer to the above diagram. At the profit-maximizing output, total fixed cost is equal to: 

D. BCFG.
47. Refer to the above diagram. At the profit-maximizing output, total variable cost is equal to: 

B. 0CFE.

48. Refer to the above diagram. At the profit-maximizing output, the firm will realize: 

D. an economic profit of ABGH.
49. In a purely competitive industry: 

C. there may be economic profits in the short run, but not in the long run.

50. The principle that a firm should produce up to the point where the marginal revenue from the sale of an extra unit of output is equal to the marginal cost of producing it is known as the: 

B. profit-maximizing rule.

51. Which of the following is true concerning purely competitive industries? 

C. In the short run, firms may incur economic losses or earn economic profits, but in the long run they earn normal profits.

52. Which of the following statements is correct

A. Economic profits induce firms to enter an industry; losses encourage firms to leave.

53. The MR = MC rule applies: 

C. in both the short run and the long run.

54. The term allocative efficiency refers to: 

C. the production of the product-mix most desired by consumers.

55. Under pure competition in the long run: 

B. both allocative efficiency and productive efficiency are achieved.

56. The above diagram portrays: 

B. the equilibrium position of a competitive firm in the long run.

57. Refer to the above diagram. If this competitive firm produces output Q, it will: 

B. earn a normal profit.

58. Which of the following conditions is true for a purely competitive firm in long-run equilibrium? 

C. P = MC = minimum ATC.

59. If profits are made in purely competitive market in the long run:
d. all of the above.
60. In pure competition in the long run when firms are in an increasing cost industry, the entry of additional firms causes:
b. cost per unit to rise, prices to fall and profits to decrease.
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