Question 1

Producer surplus equals total revenues minus total costs.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 6-3  
-To derive a firm's supply curve, we assume that a firm chooses to produce where

Accepted Answer

A) sales are at a maximum. 
B) employment is at a maximum. 
C) profits are at a maximum. 
D) total revenue is at a maximum. 
E) total cost is at a minimum. 
A) sales are at a maximum. 
B) employment is at a maximum. 
C) profits are at a maximum. 
D) total revenue is at a maximum. 
E) total cost is at a minimum.

Question 3

Stock shares are issued by

Accepted Answer

A) sole proprietorships. 
B) partnerships. 
C) corporations. 
D) nonprofit firms. 
E) government enterprises. 
A) sole proprietorships. 
B) partnerships. 
C) corporations. 
D) nonprofit firms. 
E) government enterprises.

Question 4

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

Accepted Answer

If a firm were producing at a price high

Question 5

For a competitive firm, profit maximization occurs when

Accepted Answer

A) price equals marginal revenue. 
B) price equals marginal cost. 
C) marginal revenue equals total cost. 
D) marginal cost equals total cost. 
E) total revenue equals total cost. 
A) price equals marginal revenue. 
B) price equals marginal cost. 
C) marginal revenue equals total cost. 
D) marginal cost equals total cost. 
E) total revenue equals total cost.

Question 6

The reason the firm's supply curve slopes upward is because its

Accepted Answer

A) total cost curve slopes upward. 
B) market supply curve slopes upward. 
C) total revenue curve slopes upward. 
D) marginal cost curve slopes upward. 
E) marginal product curve slopes upward. 
A) total cost curve slopes upward. 
B) market supply curve slopes upward. 
C) total revenue curve slopes upward. 
D) marginal cost curve slopes upward. 
E) marginal product curve slopes upward.

Question 7

Exhibit 6-5  
-Refer to Exhibit 6-5. The output level most likely to maximize profit is

Accepted Answer

A) zero. 
B) Q1. 
C) Q3. 
D) Q2. 
E) Q4. 
A) zero. 
B) Q1. 
C) Q3. 
D) Q2. 
E) Q4.

Question 8

The change in total output that occurs with a one-unit change in labor is called the

Accepted Answer

A) average productivity of labor. 
B) marginal product of labor. 
C) total product of labor. 
D) marginal benefit of labor. 
E) marginal cost of labor. 
A) average productivity of labor. 
B) marginal product of labor. 
C) total product of labor. 
D) marginal benefit of labor. 
E) marginal cost of labor.

Question 9

Producer surplus is just an economist's technical name for profit.

Accepted Answer

A) True 
 B)False

Question 10

The main advantage of a corporation over other types of firms is that owners also manage the firm.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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 13

Exhibit 6-7  
-Refer to Exhibit 6-7. If market price increases from $18 to $20, then producer surplus for the profit-maximizing firm

Accepted Answer

A) increases by $2. 
B) decreases by $2. 
C) increases by $7. 
D) decreases by $1. 
E) does not change. 
A) increases by $2. 
B) decreases by $2. 
C) increases by $7. 
D) decreases by $1. 
E) does not change.

Question 14

Consider the information in the table below:   Plot the total revenue and total cost curves for this firm. What is the maximum economic profit this firm can earn? How much will the entrepreneur earn when the firm is maximizing profits? Do the slopes of the two curves appear to be the same at the maximum profit level?

Accepted Answer

@#IMG-DLM& Profits are being maximized a

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 17

Total costs are the ____ variable and fixed costs.

Accepted Answer

A) quotient of 
B) difference between 
C) product of 
D) sum of 
E) difference between total revenue and the total of 
A) quotient of 
B) difference between 
C) product of 
D) sum of 
E) difference between total revenue and the total of

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

By definition, profits are

Accepted Answer

A) total output minus total inputs. 
B) total revenue plus total costs. 
C) total revenue minus total costs. 
D) total inputs minus total output. 
E) total costs minus total revenue. 
A) total output minus total inputs. 
B) total revenue plus total costs. 
C) total revenue minus total costs. 
D) total inputs minus total output. 
E) total costs minus total revenue.

Question 20

The market supply curve is obtained by summing the total costs of all firms in the market.

Accepted Answer

A) True 
 B)False

Exam 6: The Supply Curve and the Behavior of Firms

Producer surplus equals total revenues minus total costs.

Exhibit 6-3 -To derive a firm's supply curve, we assume that a firm chooses to produce where

Stock shares are issued by

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

For a competitive firm, profit maximization occurs when

The reason the firm's supply curve slopes upward is because its

Exhibit 6-5 -Refer to Exhibit 6-5. The output level most likely to maximize profit is

The change in total output that occurs with a one-unit change in labor is called the

Producer surplus is just an economist's technical name for profit.

The main advantage of a corporation over other types of firms is that owners also manage the firm.

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

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

Exhibit 6-7 -Refer to Exhibit 6-7. If market price increases from $18 to $20, then producer surplus for the profit-maximizing firm

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

When output changes, the profit-maximizing firm must consider

Total costs are the ____ variable and fixed costs.

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

By definition, profits are

The market supply curve is obtained by summing the total costs of all firms in the market.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Efficiency of 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

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

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