Question 1

Exhibit 6-8  
-Refer to Exhibit 6-8. Total revenue in the market is illustrated by area

Accepted Answer

A) B. 
B) B + C. 
C) A. 
D) A + B. 
E) C. 
A) B. 
B) B + C. 
C) A. 
D) A + B. 
E) C.

Question 2

A cost curve shows the amount of output for any given amount of input.

Accepted Answer

A) True 
 B)False

Question 3

Marginal cost begins to increase when

Accepted Answer

A) total cost falls. 
B) total product falls. 
C) diminishing returns begin. 
D) diminishing returns end. 
E) variable inputs are no longer used. 
A) total cost falls. 
B) total product falls. 
C) diminishing returns begin. 
D) diminishing returns end. 
E) variable inputs are no longer used.

Question 4

If price is greater than marginal cost and output is infinitely divisible, then

Accepted Answer

A) decreasing output decreases revenue less than it decreases cost. 
B) increasing output increases revenue more than it increases cost. 
C) increasing output increases revenue less than it increases cost. 
D) decreasing output increases revenue more than it increases cost. 
E) increasing output has no effect on revenue and cost. 
A) decreasing output decreases revenue less than it decreases cost. 
B) increasing output increases revenue more than it increases cost. 
C) increasing output increases revenue less than it increases cost. 
D) decreasing output increases revenue more than it increases cost. 
E) increasing output has no effect on revenue and cost.

Question 5

All types of firms suffer from managerial conflicts.

Accepted Answer

A) True 
 B)False

Question 6

In economics, the main objective of a firm is to maximize customer satisfaction.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 6-6  
-The market supply curve is obtained by summing

Accepted Answer

A) quantities produced by all firms at different prices. 
B) total profits made by all firms at different quantities of output. 
C) quantities produced by all firms at different prices and dividing by the number of firms. 
D) prices charged by all firms for any given quantity. 
E) marginal revenue curves of all firms in the market. 
A) quantities produced by all firms at different prices. 
B) total profits made by all firms at different quantities of output. 
C) quantities produced by all firms at different prices and dividing by the number of firms. 
D) prices charged by all firms for any given quantity. 
E) marginal revenue curves of all firms in the market.

Question 8

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.

Question 9

What is the major characteristic of a competitive market?

Accepted Answer

A market is competit

Question 10

The term diminishing returns to labor means that

Accepted Answer

A) the wage rate falls as a person takes on more jobs. 
B) total output decreases as one more unit of labor is applied to production. 
C) the market value of labor decreases as more labor is supplied. 
D) increases in output decline as additional units of labor are used in production. 
E) the production of labor is becoming less profitable with decreasing real wages. 
A) the wage rate falls as a person takes on more jobs. 
B) total output decreases as one more unit of labor is applied to production. 
C) the market value of labor decreases as more labor is supplied. 
D) increases in output decline as additional units of labor are used in production. 
E) the production of labor is becoming less profitable with decreasing real wages.

Question 11

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 12

Revenue is the only factor that affects profits.

Accepted Answer

A) True 
 B)False

Question 13

The market supply curve tends to get steeper as output increases.

Accepted Answer

A) True 
 B)False

Question 14

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 15

For a competitive firm, which of the following is false?

Accepted Answer

A) Marginal cost is constant as output changes. 
B) Marginal revenue equals price. 
C) Profit is maximized when price equals marginal cost. 
D) Profit is maximized when marginal revenue equals marginal cost. 
E) Producer surplus is zero. 
A) Marginal cost is constant as output changes. 
B) Marginal revenue equals price. 
C) Profit is maximized when price equals marginal cost. 
D) Profit is maximized when marginal revenue equals marginal cost. 
E) Producer surplus is zero.

Question 16

A monopoly is a price-maker.

Accepted Answer

A) True 
 B)False

Question 17

Profit is usually ____ producer surplus for a firm.

Accepted Answer

A) less than 
B) double 
C) greater than 
D) half of 
E) the same as 
A) less than 
B) double 
C) greater than 
D) half of 
E) the same as

Question 18

Costs that do not vary with output are called

Accepted Answer

A) total costs. 
B) short-run costs. 
C) long-run costs. 
D) variable costs. 
E) fixed costs. 
A) total costs. 
B) short-run costs. 
C) long-run costs. 
D) variable costs. 
E) fixed costs.

Question 19

A competitive firm's marginal revenue curve is the same as its demand curve.

Accepted Answer

A) True 
 B)False

Question 20

Explain what happens to market supply when a new firm enters a market, holding everything else equal.

Accepted Answer

The market supply is the horizontal summ

Exam 6: The Supply Curve and the Behavior of Firms

Exhibit 6-8 -Refer to Exhibit 6-8. Total revenue in the market is illustrated by area

A cost curve shows the amount of output for any given amount of input.

Marginal cost begins to increase when

If price is greater than marginal cost and output is infinitely divisible, then

All types of firms suffer from managerial conflicts.

In economics, the main objective of a firm is to maximize customer satisfaction.

Exhibit 6-6 -The market supply curve is obtained by summing

Marginal cost increases because

What is the major characteristic of a competitive market?

The term diminishing returns to labor means that

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

Revenue is the only factor that affects profits.

The market supply curve tends to get steeper as output increases.

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

For a competitive firm, which of the following is false?

A monopoly is a price-maker.

Profit is usually ____ producer surplus for a firm.

Costs that do not vary with output are called

A competitive firm's marginal revenue curve is the same as its demand curve.

Explain what happens to market supply when a new firm enters a market, holding everything else equal.

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

Filters

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