Economics Study Set 4
Quiz 13: Monopolistic Competition: The Competitive Model in a More Realistic Setting
Refer to Figure 13-3
Refer to Figure 13-3.What is the area that represents the total fixed cost of production? A) 0P1aQa B) P0adP3 C) P1bdP3 D) That information cannot be determined from the graph.
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Refer to Figure 13-3.What is the area that represents the loss made by the firm? A) the area P0adP3 B) the area P1bcP2 C) the area P0acP2 D) the area P2cdP3
Refer to Figure 13-3.Should the firm represented in the diagram continue to stay in business despite its losses? A) No, it should shut down. B) Yes, its total revenue covers its variable cost. C) No, it is not able to cover its fixed cost. D) Yes, it should increase its revenue by raising its price.
In the short run,a profit-maximizing firm's decision to produce should be guided by whether A) it makes a profit. B) its marginal profit is maximized. C) its total revenue exceeds its fixed cost. D) its total revenue covers its variable cost.
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