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MTTC Social Studies - Secondary (084) Practice Tests & Test Prep by Exam Edge - Free Test


Our free MTTC Social Studies - Secondary (084) Practice Test was created by experienced educators who designed them to align with the official Michigan Test for Teacher Certs content guidelines. They were built to accurately mirror the real exam's structure, coverage of topics, difficulty, and types of questions.

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MTTC Social Studies - Secondary - Free Test Sample Questions

If a firm in perfect competition is running at a loss, which of the following options should it take? I: As long as its total revenue is greater than its average variable costs, it should keep producing at its optimal output; II: It should decrease production until its output coincides with the point where the marginal cost curve meets the average variable cost curve; III: It should shut down completely if its total revenue falls to less than its average variable costs.
Correct Answer:
I and III only.

both option i and iii depending on the circumstances of the firm's losses. if its total revenue is higher than its average variable costs but lower than its average total costs, as in option i, it should keep running at its optimal output (the quantity that coincides with the point where marginal cost equals market price), since it will be able to use part of the difference between total revenue and average variable costs to pay for its fixed costs. in option iii, if its total revenue falls to less than its average variable costs, it should shut down completely in order to limit its losses to those of fixed costs. if, as in option ii, it decreases production anywhere below its optimum output without shutting down, it is simply increasing its losses, and thus is not an option that should be taken.