ECONOMICS 14200 – According to the shut-down rule, a firm should shut down

1) According to the shut-down rule, a firm should shut down in the short run whenever- at the output level where MR=MC-___A) total variable cost exceeds total revenueB) total cost exceeds total revenueC) total cost exceeds marginal costD) total fixed cost exceeds total revenueE) total fixed cost exceeds total variable cost2) No matter how large the loss, a firm should always stay open in the short run if its toal revenue is sufficient to cover the total variable cost of production. (TRUE/FALSE)3) In the short run, profit maximization typically occurs where total revenue is at its maximum (TURE/FALSE)4) The demand scedule faced by an artist for reproductions of one of his paintings is downward sloping as is the case for all imperfectly competitive firms. His marginal revenue falls as output rises because____Price Quantity Demand1,0002,0003,0004,0005,000500400300200100A) marginal cost is risingB) the artist must lower the price on all reporductions in order to sell a larger quantityC) total revenue is increasing at an increasing rateD) the price is equal to marginal revenueE) the artist works in a perfectly competive market6) Economic profit is_____A) the same as accounting profitB) the difference between the firms total revenue and its explicit costC) the difference between the firms marginal revenue and marginal costD) None of these7) Whenever marginal revenue is postive, increasing output by one unit will increase total revenue. TRUE/FALSE8) Refer to the data in 8-1 in the text, derived from the demand curve facing the firm. For this firm, the profit maximizing output level is ____A) 5B) 6C) 7D) 4E) None of these- the firm should shut down9) The output level that maximizes profit is the same as the output level that maximizes total revenue. (TRUE/FALSE)