..9..objective.

Question 1 If the marginal revenue is less than the marginal cost then to profit maximize a firm should: a) Reduce output b) Increase output c) Leave output where it is d) Increase costs Question 2 If the price is less than the average costs but higher than the average variable costs: a) The firm is making a loss and will shutdown in the short term b) The firm is making a profit c) The firm is making a loss but will continue to produce in the short term d) The firm is making a loss and is making a negative contribution to fixedcosts Question 3 If firms earn normal profits: a) They will aim to leave the industry b) Other firms will join the industry c) The total revenue equals total costs d) No profit is made in accounting terms Question 4 In the long term a firm will produce provided the revenue covers: a) Fixed costs b) Variable costs c) Total costs d) Sales Question 5 In the short term a firm will produce provided the revenue: a) Covers fixed costs b) Covers variable costs c) Covers total costs d) Covers sales Question 6 The profit per sale is a measure of: a) Cash flow b) Profitability c) Feasibility d) Liquidity