Microeconomics > QUESTIONS & ANSWERS > ECS2601 Assignment 4 (QUIZ) Semester 1 2023 (All)

ECS2601 Assignment 4 (QUIZ) Semester 1 2023

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1. In the short run, a perfectly competitive firm earning positive profit is … In the short run, a perfectly competitive firm earning positive profit is above its average total cost (ATC). This is ... because profit is calculated as the difference between total revenue and total cost. If the firm's total revenue exceeds its total cost, it is earning a profit. Since average total cost represents the cost per unit of output, if the firm is earning a profit, it means that the price it receives for each unit of output is higher than the average cost of producing that unit. a. at the minimum of its ATC. b. on the upward sloping portion of its ATC. c. on the downward sloping portion of its ATC. d. above its ATC. 2. If current output is less than the profit-maximising output, then the next unit produced will… If the current output is less than the profit-maximizing output, producing an additional unit will increase revenue more than it increases cost. This is because the profit-maximizing output level is determined by comparing marginal revenue (the additional revenue from selling one more unit) with marginal cost (the additional cost of producing one more unit). If the current output is below the profit-maximizing level, producing an additional unit will increase revenue by more than it increases cost, leading to an increase in profit. a. increase revenue more than it increases cost. b. decrease profit. c. increase revenue without increasing cost. d. increase cost more than it increases revenue. 3. Which of the following statements is correct regarding the perfectly competitive industry? [Show More]

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