Revenue and Profit
48 questions· page 1 of 5
The diagram shows the costs and revenue for a monopoly.
Which level of output would produce only a normal profit?
Options
A output level A on Fig. 6.1
B output level B on Fig. 6.1
C output level C on Fig. 6.1
D output level D on Fig. 6.1
A firm sells 10 000 units per month at a price of $10. The firm’s total fixed cost is $40 000 per month. The firm makes only normal profit.
What is the average variable cost for this output?
Options
A $2.00
B $4.00
C $6.00
D $8.00
A firm is operating at a level of output which corresponds to the point where MR = 0.
What objective is the firm achieving?
Options
A maximising consumer surplus
B maximising profit
C maximising sales
D maximising revenue
The diagram shows the cost and revenue curves for a firm.
Which output level will enable a firm to achieve its objective of maximising its revenue?
Options
A output level A on Fig. 4.1
B output level B on Fig. 4.1
C output level C on Fig. 4.1
D output level D on Fig. 4.1
The diagram shows the cost and revenue curves for a firm.
Which output level will enable a firm to achieve its objective of maximising its revenue?
Options
A output level A on Fig. 4.1
B output level B on Fig. 4.1
C output level C on Fig. 4.1
D output level D on Fig. 4.1
The table shows a firm’s revenue and costs at different levels of output.
| output | marginal revenue | average revenue | marginal cost | average total cost |
|---|---|---|---|---|
| 1 | 125 | 125 | 90 | 140 |
| 2 | 85 | 105 | 40 | 90 |
| 3 | 45 | 85 | 45 | 75 |
| 4 | 25 | 70 | 95 | 80 |
| 5 | 20 | 60 | 130 | 90 |
What is the firm’s total supernormal profit at the profit-maximising level of output?
Options
A -15
B 10
C 30
D 120
At which level of output is sales maximisation achieved consistent with earning normal profit?
Options
A output level A on Fig. 5.1
B output level B on Fig. 5.1
C output level C on Fig. 5.1
D output level D on Fig. 5.1
A firm wishes to maximise its revenue.
Which condition must be met to achieve this goal?
Options
A average cost = average revenue
B marginal cost = average revenue
C marginal cost = marginal revenue
D marginal revenue = zero
The table shows a firm’s total costs corresponding to different levels of output.
| units of output | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
|---|---|---|---|---|---|---|---|---|
| total cost ($) | 8 | 14 | 18 | 22 | 28 | 36 | 46 | 58 |
If the market price is $8, within which range of output would a profit-maximising firm in a perfectly competitive industry produce in the short run?
Options
A 1–2 units
B 3–4 units
C 5–6 units
D 7–8 units
What must equal marginal cost when a profit-maximising firm produces at its allocatively efficient output?
Options
A average revenue
B average total cost
C total revenue
D total cost