15 If a firm makes zero economic profit then the firm A has

15) If a firm makes zero economic profit, then the firm A) has total revenues greater than its economic costs. B) must shut down. C) can be earning positive business profit. D) must have no fixed costs. 16) If a firm traded on the New York Stock Exchange posts an accounting profit of $10 million, then the firm is making a positive economic profit A) only if the Securities and Exchange Commission (SEC) approves the accounting report. B) only if the firm\'s opportunity cost is less than $10 million. C) only if the firm\'s opportunity benefit is more than $10 million. D) only if the firm\'s management receives stock compensation. 17) A firm sets its output where A) marginal profit is zero. B) marginal revenue is maximized. marginal profit equals marginal revenue. marginal profit is maximized. 18) If marginal revenue equals marginal cost, the firm is maximizing profits as long as A) the resulting profits are positive. B) marginal cost exceeds marginal revenue for greater levels of output. C) the average cost curve lies above the demand curve. D) All of the above are required. 19) A firm should always shut down if its revenue is A) declining B) less than its average fixed costs. C) less than its total costs D) less than its avoidable costs. 20) In deciding whether to operate in the short run, the firm must consider the relationship between price and A) total cost. B) average variable cost. C) total fixed cost. D) the number of buyers.

Solution

15. C). If a firm makes zero economic profits this means that the firm can be earning positive business profit.

Explanation:Zero eonomic profit means the firm is earning a minimum profit which is necessary to remain in the business.

16.B

Explanation: A company can have economic profit only if the profit earned by the investment is more than the opportunity cost.

17. A.

Explanation: A firm sets its ouput where the profit is maximised and this happens when marginal profit is set equal to zero.

18. B

Explanation: A monopolists firm profit maxsimizing ouptut is obtained by putting MR=MC. In this case, if ouput is produced more than the optimal level of output then MC>MR.

19.D

Explanation: A firm must dhut down when its revenue is less than its avoidable cost. i.e. it must shut down if it can reduce its loss by shutting down.

20. B

Explanation: In short run, a firm continues to produce till its price is greater than its average variable cost.