Suppose Your Trucking Firm in a Perfectly Competitive Industry Is
Suppose your trucking firm in a perfectly competitive industry is making zero economic profits in the short run.The federal government imposes a new safety regulation that affects all firms,thus shifting the marginal cost curve upward.As a result your firmʹs profit maximizing short-run output will
A)decrease because the new MC curve will intersect the horizontal demand curve at a lower rate of output.
B)remain the same because you will pass on the extra costs to the consumers.
C)remain the same since the new regulation does not affect ATC.
D)increase as firms will leave the industry at the higher costs,thus driving up the market price.
E)increase as price rises in the long run.
If a perfectly competitive firm is faced with average revenue below average variable cost it will produce zero output so as to reduce its
A)costs to below its revenue.
B)costs to zero.
C)losses to the amount of its fixed costs.
D)losses to the amount of its variable costs.
E)losses to the amount of its marginal costs.
On a graph showing a firmʹs TC and TR curves,the profit -maximizing level of output is found where
A)TC intersects the vertical axis.
B)TR becomes vertical.
C)TR lies above TC by the greatest amount.
D)TR and TC intersect.
E)TR is at a maximum.
Suppose that in a perfectly competitive industry,the market price of the product is $6.A firm is producing the output level at which average total cost equals marginal cost,both of which are $8.Average variable cost is $4.To maximize its profits in the short run,the firm should
A)reduce its output.
B)expand its output.
C)leave its output unchanged.
E)There is insufficient information to know.