Calculate The Profit Of A Firm In The Short Run

Question

1. Costs for Toy-Making Firm
  Q   ATC        AVC       AFC       MC
  0    —            —          —          —
  8    93.75    31.25    62.50    31.25
17    58.82    29.41    29.41    27.78
27    46.30    27.78    18.52    25.00
40    37.50    25.00    12.50    19.23
54    32.41    23.15    9.26     17.86
66    30.30    22.73    7.58     20.83
76    29.61    23.03    6.58     25.00
84    29.76    23.81    5.95     31.25
91    30.22    24.73    5.49     35.71
96    31.25    26.04    5.21     50.00

(Table) If the toy-making firm in the table in the short run faces a market price of $25:

A) it will maximize its profits by producing 96 toys.
B) it will minimize its losses by shutting down.
C) it will minimize its losses by producing 27 toys.
D) it will minimize its losses by producing 76 toys.

2. When a firm experiences economies of scale:

A) its long-run average total costs remain the same as output increases.
B) it runs into bureaucratic red tape.
C) its long-run average total costs increase as output increases.
D) it can take advantage of specialization of labor and management.

Summary

These multiple choice questions belong to Economics. The 1st question is about calculating the profit of a firm in the short run and the 2nd question is about firm experiencing economies to scale.

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