Principles of Microeconomics, 8e (Case/Fair)
Chapter 9: Long-Run Costs and Output Decisions
Short-Run Conditions and Long-Run Directions

Multiple Choice 1)
Assume firms break even in an industry. New investors _______ attracted to the industry and current ones ______ running away from it. A) are not; are not B) are not; are C) are; are not D) are; are Answer:
A
Diff: 2 Type: F

2)
Firms earning a profit will want to ______ their profits in the short run while firms suffering losses will want to ______ their losses. A) maximize; maximize B) maximize; minimize C) minimize; maximize D) minimize; minimize Answer:
B
Diff: 1 Type: F

Refer to the information provided below in Scenario 1 to answer the following questions.

SCENARIO 1: Amy borrowed $20,000 from her parents to open a bagel shop. She pays her parents a 5% yearly return on the money they lent her. Her other yearly fixed costs equal $9,000. Her variable costs equal $30,000. In her first year, Amy sold 40,000 dozen at a price of $1.50 per dozen. 3)
Refer to Scenario 1. Amy's total fixed costs equal A)
$1,000.
B)
$9,000.
C)
$10,000.
D)
$21,000.
Answer:
C
Diff: 2 Type: A

4)
Refer to Scenario 1. Amy's total costs equal A)
$39,000.
B)
$40,000.
C)
$50,000.
D)
$59,000.
Answer:
B
Diff: 2 Type: A

5)
Refer to Scenario 1. Amy's profit is A)
$0.
B)
$20,000.
C)
$30,000.
D)
$50,000.
Answer:
B
Diff: 2 Type: A

Refer to the information in Scenario 2 below to answer the following questions.

SCENARIO 2: Tom borrowed $40,000 from his parents to open a donut stand. He agrees to pay his