Question 1
A firm earns a profit if
◦ total revenue exceeds the total cost of production.
◦ total revenue equals total fixed costs.
◦ price is less than the total cost of production.
◦ price equals marginal cost.
Question 2
A firm suffers losses if
◦ price exceeds average variable cost but is less than average total cost.
◦ price exceeds marginal cost.
◦ total revenue is greater than the total fixed cost of production.
◦ total revenue is greater than the total variable cost of production but less than total costs.