Question 1

If the market wage increases, marginal cost shifts ____ and market supply ____.

Accepted Answer

A)  upward; decreases 
B)  downward; decreases 
C)  upward; increases 
D)  downward; increases 
E)  upward and then downward; remains unchanged 
A)  upward; decreases 
B)  downward; decreases 
C)  upward; increases 
D)  downward; increases 
E)  upward and then downward; remains unchanged

Question 2

Exhibit 6-4  
-Refer to Exhibit 6-4. Suppose the firm has fixed costs of $30. What is the total cost if output is 5 units?

Accepted Answer

A)  $80 
B)  $104 
C)  $30 
D)  $50 
E)  $62 
A)  $80 
B)  $104 
C)  $30 
D)  $50 
E)  $62

Question 3

Producer surplus equals total revenues minus total costs.

Accepted Answer

A) True 
 B)False

Question 4

A price-taking firm is one that forces consumers to take whatever price the firm wishes.

Accepted Answer

A) True 
 B)False

Question 5

Because marginal cost increases as output increases,

Accepted Answer

A)  marginal product increases at an increasing rate. 
B)  the total cost curve gets steeper as output increases. 
C)  the fixed cost curve gets steeper as output increases. 
D)  the total product curve gets steeper as output increases. 
E)  the total cost curve becomes horizontal. 
A)  marginal product increases at an increasing rate. 
B)  the total cost curve gets steeper as output increases. 
C)  the fixed cost curve gets steeper as output increases. 
D)  the total product curve gets steeper as output increases. 
E)  the total cost curve becomes horizontal.

Question 6

An individual firm in a competitive market

Accepted Answer

A)  decides, given the market price, how much to produce and sell. 
B)  has no control over the price or the quantity it produces and sells. 
C)  takes the market-determined amount it should sell as given, and then, based on this amount, determines what price to charge. 
D)  decides what price to charge and how much to produce and sell. 
E)  has control over the price but not the quantity to produce and sell. 
A)  decides, given the market price, how much to produce and sell. 
B)  has no control over the price or the quantity it produces and sells. 
C)  takes the market-determined amount it should sell as given, and then, based on this amount, determines what price to charge. 
D)  decides what price to charge and how much to produce and sell. 
E)  has control over the price but not the quantity to produce and sell.

Question 7

Profit maximization in a competitive market implies that output price equals marginal revenue and marginal cost.

Accepted Answer

A) True 
 B)False

Question 8

The slope of the total cost curve as output increases reflects

Accepted Answer

A)  decreasing marginal benefit. 
B)  increasing marginal benefit. 
C)  decreasing marginal cost. 
D)  increasing marginal cost. 
E)  increasing variable cost. 
A)  decreasing marginal benefit. 
B)  increasing marginal benefit. 
C)  decreasing marginal cost. 
D)  increasing marginal cost. 
E)  increasing variable cost.

Question 9

Why is a monopoly a price-maker?

Accepted Answer

A monopoly is a single produce

Question 10

If total revenue is less than total costs, then

Accepted Answer

A)  economic profits are positive. 
B)  economic profits are zero. 
C)  economic profits are negative. 
D)  a firm breaks even. 
E)  profits can be positive or negative, depending on other factors. 
A)  economic profits are positive. 
B)  economic profits are zero. 
C)  economic profits are negative. 
D)  a firm breaks even. 
E)  profits can be positive or negative, depending on other factors.

Question 11

A competitive firm's supply curve is

Accepted Answer

A)  output price. 
B)  its marginal cost curve. 
C)  its total revenue curve. 
D)  its total cost curve. 
E)  its marginal revenue curve. 
A)  output price. 
B)  its marginal cost curve. 
C)  its total revenue curve. 
D)  its total cost curve. 
E)  its marginal revenue curve.

Question 12

Suppose you are able to babysit at $10 per hour. The only cost to you is the opportunity cost of your time. For the first 2 hours, the opportunity cost of your time is $7 per hour. But after 2 hours, the opportunity cost of your time rises to $13 because of other commitments. Draw the marginal cost to you of babysitting. Draw in the price you receive for babysitting. For how long will you babysit? Calculate your producer surplus.

Accepted Answer

The answer of Suppose you are able to babysit at...

Question 13

Which of the following is true for a profit-maximizing firm in a competitive market?

Accepted Answer

A)  Marginal cost is greater than marginal revenue and price. 
B)  Marginal cost is greater than marginal revenue but less than price. 
C)  Marginal cost is less than marginal revenue but higher than price. 
D)  Marginal cost equals price but is less than marginal revenue. 
E)  Marginal cost equals marginal revenue and price. 
A)  Marginal cost is greater than marginal revenue and price. 
B)  Marginal cost is greater than marginal revenue but less than price. 
C)  Marginal cost is less than marginal revenue but higher than price. 
D)  Marginal cost equals price but is less than marginal revenue. 
E)  Marginal cost equals marginal revenue and price.

Question 14

In 2010, a firm produced 100 units of good X at $1. In 2011, the firm produced 200 units of good X at $0.5. Between 2010 and 2011, the total revenue of producing good X

Accepted Answer

A)  stayed constant 
B)  increased. 
C)  might increase, decrease, or stay constant. 
D)  decreased. 
E)  was equal to zero. 
A)  stayed constant 
B)  increased. 
C)  might increase, decrease, or stay constant. 
D)  decreased. 
E)  was equal to zero.

Question 15

Diminishing returns occur when the

Accepted Answer

A)  marginal product of an input is positive. 
B)  marginal product of an input is zero. 
C)  marginal product of an input is decreasing. 
D)  total product of an input is zero. 
E)  total product of an input is negative. 
A)  marginal product of an input is positive. 
B)  marginal product of an input is zero. 
C)  marginal product of an input is decreasing. 
D)  total product of an input is zero. 
E)  total product of an input is negative.

Question 16

Other things being equal, an increase in marginal cost reduces producer surplus.

Accepted Answer

A) True 
 B)False

Question 17

A graph showing how much total output results for any given amount of input is called a(n)

Accepted Answer

A)  labor function. 
B)  production function. 
C)  marginal product curve. 
D)  variable cost curve. 
E)  earnings schedule. 
A)  labor function. 
B)  production function. 
C)  marginal product curve. 
D)  variable cost curve. 
E)  earnings schedule.

Question 18

Suppose a firm's supply curve can be expressed as -4 + 2P. Calculate the firm's producer surplus when price is $25.

Accepted Answer

$529
Firm output is -4 + 2(25)

Question 19

Which of the following statements concerning the slope of market supply is false?

Accepted Answer

A)  Market supply usually gets steeper as output increases. 
B)  The slope of a market supply curve depends on the slopes of individual marginal cost curves. 
C)  The steeper marginal cost curves are for individual firms, the steeper market supply will be. 
D)  The slope of market supply is somewhat dependent on the shape of the market demand curve. 
E)  Individual marginal cost curves have positive slopes, and so does market supply. 
A)  Market supply usually gets steeper as output increases. 
B)  The slope of a market supply curve depends on the slopes of individual marginal cost curves. 
C)  The steeper marginal cost curves are for individual firms, the steeper market supply will be. 
D)  The slope of market supply is somewhat dependent on the shape of the market demand curve. 
E)  Individual marginal cost curves have positive slopes, and so does market supply.

Question 20

Marginal cost increases because

Accepted Answer

A)  marginal product decreases. 
B)  the price of labor decreases. 
C)  marginal product increases. 
D)  the price of labor increases. 
E)  marginal product is constant. 
A)  marginal product decreases. 
B)  the price of labor decreases. 
C)  marginal product increases. 
D)  the price of labor increases. 
E)  marginal product is constant.

If the market wage increases, marginal cost shifts and market supply .

Exhibit 6-4 -Refer to Exhibit 6-4. Suppose the firm has fixed costs of $30. What is the total cost if output is 5 units?

Producer surplus equals total revenues minus total costs.

A price-taking firm is one that forces consumers to take whatever price the firm wishes.

Because marginal cost increases as output increases,

An individual firm in a competitive market

Profit maximization in a competitive market implies that output price equals marginal revenue and marginal cost.

The slope of the total cost curve as output increases reflects

Why is a monopoly a price-maker?

If total revenue is less than total costs, then

A competitive firm's supply curve is

Which of the following is true for a profit-maximizing firm in a competitive market?

In 2010, a firm produced 100 units of good X at $1. In 2011, the firm produced 200 units of good X at $0.5. Between 2010 and 2011, the total revenue of producing good X

Diminishing returns occur when the

Other things being equal, an increase in marginal cost reduces producer surplus.

A graph showing how much total output results for any given amount of input is called a(n)

Suppose a firm's supply curve can be expressed as -4 + 2P. Calculate the firm's producer surplus when price is $25.

Which of the following statements concerning the slope of market supply is false?

Marginal cost increases because

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

The Demand Curve and the Behavior of Consumers

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Reading, Understanding, and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Filters

Exam 6: The Supply Curve and the Behavior of Firms

If the market wage increases, marginal cost shifts ____ and market supply ____.

Exhibit 6-4 -Refer to Exhibit 6-4. Suppose the firm has fixed costs of $30. What is the total cost if output is 5 units?

Producer surplus equals total revenues minus total costs.

A price-taking firm is one that forces consumers to take whatever price the firm wishes.

Because marginal cost increases as output increases,

An individual firm in a competitive market

Profit maximization in a competitive market implies that output price equals marginal revenue and marginal cost.

The slope of the total cost curve as output increases reflects

Why is a monopoly a price-maker?

If total revenue is less than total costs, then

A competitive firm's supply curve is

Which of the following is true for a profit-maximizing firm in a competitive market?

In 2010, a firm produced 100 units of good X at $1. In 2011, the firm produced 200 units of good X at $0.5. Between 2010 and 2011, the total revenue of producing good X

Diminishing returns occur when the

Other things being equal, an increase in marginal cost reduces producer surplus.

A graph showing how much total output results for any given amount of input is called a(n)

Suppose a firm's supply curve can be expressed as -4 + 2P. Calculate the firm's producer surplus when price is $25.

Which of the following statements concerning the slope of market supply is false?

Marginal cost increases because

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

The Demand Curve and the Behavior of Consumers

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Reading, Understanding, and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Filters

If the market wage increases, marginal cost shifts and market supply .