aWhen are breakeven points realized for a firm in a perfectl

a)When are break-even points realized for a firm in a perfectly competitive market?

When AR=P.

When MR=MC.

When AC=MC.

When MR=AC.

b)Which of the following statements is true regarding the price in a perfectly competitive market?

Price equals average revenue but not marginal revenue.

Price equals marginal revenue but not average revenue.

Price is equal to neither the average nor the marginal revenue.

Price is equal to both the average and marginal revenue.

Refer to the above graph to answer the question. The graph shows a firm in a perfectly competitive market.

If the market equilibrium price is $60, what would be true if the firm was producing at an output of 9 per period?

A)

The firm should shut down production.

B)

The firm should lower its selling price to $50.

C)

The firm would be breaking even.

D)

The firm is generating the greatest profit.

	When AR=P.
	When MR=MC.
	When AC=MC.
	When MR=AC. b)Which of the following statements is true regarding the price in a perfectly competitive market? Price equals average revenue but not marginal revenue. Price equals marginal revenue but not average revenue. Price is equal to neither the average nor the marginal revenue. Price is equal to both the average and marginal revenue. Refer to the above graph to answer the question. The graph shows a firm in a perfectly competitive market. If the market equilibrium price is $60, what would be true if the firm was producing at an output of 9 per period? A) The firm should shut down production. B) The firm should lower its selling price to $50. C) The firm would be breaking even. D) The firm is generating the greatest profit.

$100 90 80 70 60 McIAC a 40 30 20 10 12 3 4 5 6 7 8 9 10 11 12 13 Quantity per period

Solution

Qa: Answer is When MR= AC When in Perfect competition MR=AR For break even point AR=AC Hence, MR=AC Q b: Answer is Price is equal to both Average and marginal revenue Q c: Answer is C. Firm should be Breaking even Explanation: At output $ 9, AC= 60 Hence Ar =Ac, no profit no loss situation.