Econ 355: Microeconomics
They are more likely to become takeover targets of profit-maximizing firms
Their companies are more likely to survive in the long run
They are more likely to have higher profit than if they had pursued that policy explicitly
They are less likely to be replaced by stockholders
Theya re less likely to be replaced by the board of directors
They must have the same slope
They must intersect, with TC cutting TR from below
They must be tangent to each other
They must intersect, with TC cutting TR from above
They cannot be tangent to each other
AR = MR
P = MR
P = MC
P = AC
P = AVC
79
67
54
60
30
Not maximized, and zero
Maximized and zero
Maximized and negative
Maximized and positive
Not maximized, and negative
$3160
$2160
$1200
$2680
$2400
Lower prices to gain revenue from extra volume
Continue operating, but plan to go out of business
Shut down immediately, but not liquidate the business
Shut down immediately and liquidate the business
Raise prices
Upward shifts of MC and reductions in output
Upward shifts of MC and increases in output
Increased quality of the good, but little change in MC
Downward shifts of MC and reductions in output
Downward shifts of MC and increases in output
Its short run supply curve is the upward-sloping portion of the marginal cost curve
Its short run supply curve is U-shaped too
Its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average total cost curve
Its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average variable cost curve
Its short run supply curve is the downward-sloping portion of the marginal cost curve
Upward shifts of MC and reductions in output
Increased demand for the good the input is used for
Downward shifts of MC and reductions in output
Downward shifts of MC and increases in output
Upward shifts of MC and increases in output
Vertical intercept of the supply curve
Area between the equilibrium price line and the supply curve to the left of equilibrium output
Area between the demand curve and the supply curve to the left of equilibrium output
Area under the supply curve to the left of equilibrium output
Area under the demand curve to the left of equilibrium output
39
64
50
34
22
$1000
$306
$88
$1024
$351
$64
$71
$70
$60
$80
An increase in supply that will bring price down to the level it was before the demand shift
An increase in supply that will bring price down below the level it was before the demand shift
An increase in supply that will not change price from the higher level that occurs after the demand shift
A decrease in demand to keep price constant
No increase in supply
LRAC and minimum LRMC
LRMC and minimum LRAC
Minimum LRAC, but not LRMC
Minimum LRAC and minimum LRMC
LRMC and LRAC, but not necessarily minimum LRAC
P = 10 + 0.02Q
P = 1000 + 2Q
P = 10 + 200Q
P = 1000 + 200Q
Do nothing
Maintain output constant but change the mix of inputs
Reduce output as marginal cost rises
Increase output to increase revenue
5 units
50 units
0 units
1 unit
0
40
90
20
40Q
40
.4Q
.4
AVC is horizontal
Q = 100
Q = 5
Q = 10
$525
$200
$233
$185
None of the above
$1000
$700
$1500
$2000
None of the above
A
B
C
D
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