Table: Decision to Enter Use the Table

question 184

Multiple Choice

Table: Decision to Enter $$\begin{array} { c c c } \hline \begin{array} { c } \text { Quantity } \\\text { (per day) }\end{array} & \begin{array} { c } \text { Marginal Revenue } \\\text { = Price }\end{array} & \begin{array} { c } \text { Marginal } \\\text { Cost }\end{array} \\\hline 1 & \$ 750 & \$ 150 \\2 & \$ 750 & \$ 400 \\3 & \$ 750 & \$ 750 \\4 & \$ 750 & \$ 1,250 \\\hline\end{array}$$ Use the table. A firm is considering whether to enter an industry, with the conditions upon entry set forth in the table. Entering the industry would require the firm to pay $800 per day in fixed costs. This firm should ________ the industry because its profits would be ________ per day.

• A) not enter; -$1,350
• B) not enter; -$800
• C) enter; $700
• D) enter; $150

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Definitions:

CO₂

Carbon dioxide, a colorless, odorless gas produced by burning carbon and organic compounds and by respiration.

Midline

An imaginary line that divides the body into equal right and left halves.

Tasteless

Lacking flavor or not having any taste, often used to describe food or substances without a discernible taste.

Odorless

Lacking a detectable smell.