AP Micro Unit 3

What should you do?

• Shut Down
• Take loss but stay open
• Stay open, Normal Profit
• Stay open, Positive Economic Profit

What should you do?

• Shut Down
• Stay open and take a loss
• Stay open, Positive Economic Profit
• Stay open, Normal Profit

Based on the cost and output data in the table shown, a perfectly competitive firm will shut down if price falls below:

• $15 
• $16
• $18
• $20

In the short run, the firm will realize an economic loss but will continue to produce if the price is:

• below P2
  
• between P1 and P2 
• between P2 and P3 
• between P3 and P4 

How does the profit-maximizing behavior of a monopolistic competitor compare to that of perfect competitors, oligopolies, and monopolies?

• They all try to find the level of output where their marginal cost is equal to their marginal revenue.
• The monopolistic competitor is similar to monopoly but not to pure competition.
• The monopolistic competitor is similar to pure competition but not to oligopoly.
• The monopolistic competitor is similar to monopoly but not to oligopoly.

In the short run, a perfectly competitive firm produces output and breaks even if:

• the firm produces the quantity at which P < ATC.
• the firm produces the quantity at which P = ATC.
• the firm produces the quantity at which P > ATC.
• the firm produces the quantity at which P = (TR/Q + TC/Q) × Q.

• Shut Down
• Stay open and take a loss
• Normal Profit
• Positive Economic Profit

This perfect competitor will maximize profits at what output level?

• A
• B
• C
• D

At price G, the area of which rectangle represents total revenue for the profit-maximizing perfect competitor?

• 0GKC
• 0FJC
• FGKJ
• EFJH

Perfect competition is best described as a market with

• few firms producing essentially the same product

• many firms producing essentially the same product

• many firms producing very different products

• few firms producing very different products