Test Questions Flashcards
(7 cards)
1
Q
As production increases, how does a unit’s share of fixed costs change?
A
It continually decreases as output increases.
2
Q
when does marginal cost equal ATC?
A
when ATC is at its minimum
3
Q
What is the short-run supply curve for a perfectly competitive firm?
A
the portion of the firm’s marginal-cost curve that lies above the average-variable-cost curve
4
Q
What is a characteristic of a perfectly competitive market?
A
Marginal revenue equals average revenue.
5
Q
When a perfectly competitive firm produces another unit of output, what equals its marginal revenue?
A
price
6
Q
In the short run, what is the level of output a profit-maximizing price taker should choose?
A
P = MC, but only if P ≥ AVC
7
Q
A
