Question 1

A firm is a(n)

Accepted Answer

A)  organization formed to save on income taxes. 
B)  organization that produces goods and services. 
C)  entity that produces only services. 
D)  required organization mandated by government for tax purposes. 
E)  law representative for small businesses. 
A)  organization formed to save on income taxes. 
B)  organization that produces goods and services. 
C)  entity that produces only services. 
D)  required organization mandated by government for tax purposes. 
E)  law representative for small businesses.

Question 2

Exhibit 6-3  
-Refer to Exhibit 6-3. Calculate the marginal cost for each of these units of output: third, fifth, and eighth.

Accepted Answer

Third unit: $53- $47

Question 3

In contrast with a firm in a competitive market, a monopoly is able to control

Accepted Answer

A)  input costs. 
B)  price. 
C)  profits. 
D)  demand. 
E)  all aspects of its operation. 
A)  input costs. 
B)  price. 
C)  profits. 
D)  demand. 
E)  all aspects of its operation.

Question 4

When output changes, the profit-maximizing firm must consider

Accepted Answer

A)  only whether output price is affected. 
B)  only how much total revenue is affected. 
C)  the change in marginal cost only. 
D)  only how much total cost is affected. 
E)  how much both total cost and total revenue are affected. 
A)  only whether output price is affected. 
B)  only how much total revenue is affected. 
C)  the change in marginal cost only. 
D)  only how much total cost is affected. 
E)  how much both total cost and total revenue are affected.

Question 5

Which of the following is an example of a firm?

Accepted Answer

A)  A local government agency 
B)  A family with four children 
C)  A grocery store 
D)  A public school 
E)  The U.S. Department of Commerce 
A)  A local government agency 
B)  A family with four children 
C)  A grocery store 
D)  A public school 
E)  The U.S. Department of Commerce

Question 6

Exhibit 6-5  
-Refer to Exhibit 6-5. Which of the following statements is not true?

Accepted Answer

A)  Fixed costs equal total costs when output equals zero. 
B)  The output closest to the profit-maximizing level is Q3. 
C)  Profit is the same at Q1 as it is at Q4. 
D)  Profit is equal to zero when output equals zero. 
E)  Marginal cost is less than marginal revenue at Q2. 
A)  Fixed costs equal total costs when output equals zero. 
B)  The output closest to the profit-maximizing level is Q3. 
C)  Profit is the same at Q1 as it is at Q4. 
D)  Profit is equal to zero when output equals zero. 
E)  Marginal cost is less than marginal revenue at Q2.

Question 7

A firm that considers price as a given and chooses quantity of output accordingly is called a

Accepted Answer

A)  profit-maximizer. 
B)  quantity-setter. 
C)  market-taker. 
D)  monopoly. 
E)  price-taker. 
A)  profit-maximizer. 
B)  quantity-setter. 
C)  market-taker. 
D)  monopoly. 
E)  price-taker.

Question 8

Marginal product decreases as labor increases because marginal cost is rising.

Accepted Answer

A) True 
 B)False

Question 9

When more producers enter a competitive market, the market supply curve

Accepted Answer

A)  shifts to the right. 
B)  shifts to the left. 
C)  does not shift. 
D)  always becomes steeper. 
E)  always becomes flatter. 
A)  shifts to the right. 
B)  shifts to the left. 
C)  does not shift. 
D)  always becomes steeper. 
E)  always becomes flatter.

Question 10

Define diminishing returns in production and illustrate it with the graph of a production function.

Accepted Answer

Diminishing returns occur when an additi

Question 11

If marginal cost increases, then the market supply curve shifts to the left.

Accepted Answer

A) True 
 B)False

Question 12

The curve that indicates how much output a profit-maximizing competitive firm will produce at any given price is the

Accepted Answer

A)  marginal revenue curve. 
B)  total revenue curve. 
C)  marginal cost curve. 
D)  total cost curve. 
E)  fixed cost curve. 
A)  marginal revenue curve. 
B)  total revenue curve. 
C)  marginal cost curve. 
D)  total cost curve. 
E)  fixed cost curve.

Question 13

Exhibit 6-4  
-Refer to Exhibit 6-4. If output price is $14, the profit-maximizing output level is ____ units.

Accepted Answer

A)  2 
B)  5 
C)  3 
D)  4 
E)  6 
A)  2 
B)  5 
C)  3 
D)  4 
E)  6

Question 14

Production in the short run requires

Accepted Answer

A)  no factor of production. 
B)  both fixed and variable factors of production. 
C)  variable factors of production only. 
D)  fixed factors of production only. 
E)  the difference between fixed and variable factors of production. 
A)  no factor of production. 
B)  both fixed and variable factors of production. 
C)  variable factors of production only. 
D)  fixed factors of production only. 
E)  the difference between fixed and variable factors of production.

Question 15

The approach based on the relationship between price and marginal cost brings about the same supply curve as what is implied by the approach based on profit maximization.

Accepted Answer

A) True 
 B)False

Question 16

Exhibit 6-5  
-Refer to Exhibit 6-5. At Q4,

Accepted Answer

A)  total revenue is equal to zero. 
B)  marginal revenue is negative. 
C)  total profit is equal to zero. 
D)  total profit is negative. 
E)  both marginal profit and marginal cost are negative. 
A)  total revenue is equal to zero. 
B)  marginal revenue is negative. 
C)  total profit is equal to zero. 
D)  total profit is negative. 
E)  both marginal profit and marginal cost are negative.

Question 17

Exhibit 6-4  
-Refer to Exhibit 6-4. Assume that fixed costs equal $30. If the price is $20, the profit that results at the profit-maximizing output level is

Accepted Answer

A)  $50. 
B)  $38. 
C)  $20. 
D) -$4. 
E)  $80. 
A)  $50. 
B)  $38. 
C)  $20. 
D) -$4. 
E)  $80.

Question 18

What is the relationship between the slope of the total cost curve and marginal cost? Explain.

Accepted Answer

The slope of the total cost curve and ma

Question 19

Which of the following is typically a variable factor of production?

Accepted Answer

A)  Land 
B)  Equipment 
C)  Plant 
D)  Labor 
E)  Money 
A)  Land 
B)  Equipment 
C)  Plant 
D)  Labor 
E)  Money

Question 20

Why is an individual firm in a competitive market a price-taker?

Accepted Answer

If a firm were producing at a price high

A firm is a(n)

Exhibit 6-3 -Refer to Exhibit 6-3. Calculate the marginal cost for each of these units of output: third, fifth, and eighth.

In contrast with a firm in a competitive market, a monopoly is able to control

When output changes, the profit-maximizing firm must consider

Which of the following is an example of a firm?

Exhibit 6-5 -Refer to Exhibit 6-5. Which of the following statements is not true?

A firm that considers price as a given and chooses quantity of output accordingly is called a

Marginal product decreases as labor increases because marginal cost is rising.

When more producers enter a competitive market, the market supply curve

Define diminishing returns in production and illustrate it with the graph of a production function.

If marginal cost increases, then the market supply curve shifts to the left.

The curve that indicates how much output a profit-maximizing competitive firm will produce at any given price is the

Exhibit 6-4 -Refer to Exhibit 6-4. If output price is $14, the profit-maximizing output level is ____ units.

Production in the short run requires

The approach based on the relationship between price and marginal cost brings about the same supply curve as what is implied by the approach based on profit maximization.

Exhibit 6-5 -Refer to Exhibit 6-5. At Q₄,

Exhibit 6-4 -Refer to Exhibit 6-4. Assume that fixed costs equal $30. If the price is $20, the profit that results at the profit-maximizing output level is

What is the relationship between the slope of the total cost curve and marginal cost? Explain.

Which of the following is typically a variable factor of production?

Why is an individual firm in a competitive market a price-taker?

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

A firm is a(n)

Exhibit 6-3 -Refer to Exhibit 6-3. Calculate the marginal cost for each of these units of output: third, fifth, and eighth.

In contrast with a firm in a competitive market, a monopoly is able to control

When output changes, the profit-maximizing firm must consider

Which of the following is an example of a firm?

Exhibit 6-5 -Refer to Exhibit 6-5. Which of the following statements is not true?

A firm that considers price as a given and chooses quantity of output accordingly is called a

Marginal product decreases as labor increases because marginal cost is rising.

When more producers enter a competitive market, the market supply curve

Define diminishing returns in production and illustrate it with the graph of a production function.

If marginal cost increases, then the market supply curve shifts to the left.

The curve that indicates how much output a profit-maximizing competitive firm will produce at any given price is the

Exhibit 6-4 -Refer to Exhibit 6-4. If output price is $14, the profit-maximizing output level is ____ units.

Production in the short run requires

The approach based on the relationship between price and marginal cost brings about the same supply curve as what is implied by the approach based on profit maximization.

Exhibit 6-5 -Refer to Exhibit 6-5. At Q4,

Exhibit 6-4 -Refer to Exhibit 6-4. Assume that fixed costs equal $30. If the price is $20, the profit that results at the profit-maximizing output level is

What is the relationship between the slope of the total cost curve and marginal cost? Explain.

Which of the following is typically a variable factor of production?

Why is an individual firm in a competitive market a price-taker?

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

Exhibit 6-5 -Refer to Exhibit 6-5. At Q₄,