Question 1

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 2

When fertilizer yields diminishing returns in the production of potatoes,

Accepted Answer

A) output increases only if fertilizer input is increased. 
B) additional fertilizer causes decreased production. 
C) doubling fertilizer input less than doubles output. 
D) marginal cost decreases as more fertilizer is added. 
E) doubling fertilizer input more than doubles output. 
A) output increases only if fertilizer input is increased. 
B) additional fertilizer causes decreased production. 
C) doubling fertilizer input less than doubles output. 
D) marginal cost decreases as more fertilizer is added. 
E) doubling fertilizer input more than doubles output.

Question 3

Land is commonly considered a fixed factor of production.

Accepted Answer

A) True 
 B)False

Question 4

Compute the total revenue, total costs, and profits when the price of a crate of grapes is $80. How many crates of grapes will maximize profits? How does the answer compare to the price equals marginal cost condition?

Accepted Answer

In this example, profit is being maximiz

Question 5

Exhibit 6-1  
-Refer to Exhibit 6-1. The marginal product of the fifth unit of labor is

Accepted Answer

A) 8. 
B) 28. 
C) 5. 
D) 2. 
E) 3. 
A) 8. 
B) 28. 
C) 5. 
D) 2. 
E) 3.

Question 6

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 7

Exhibit 6-2  
-Refer to Exhibit 6-2. The marginal cost of the second pound of bananas is

Accepted Answer

A) $25. 
B) $2. 
C) $3. 
D) $4. 
E) $0. 
A) $25. 
B) $2. 
C) $3. 
D) $4. 
E) $0.

Question 8

By definition, a profit-maximizing firm is a monopoly.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 6-3  
-Refer to Exhibit 6-3. What is the profit-maximizing output level if output price is $16?

Accepted Answer

5 units
Calculate total revenue at each

Question 10

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 11

An improvement in production technology shifts marginal cost

Accepted Answer

A) downward and does not affect market supply. 
B) and market supply downward. 
C) and market supply upward. 
D) downward and shifts market supply upward. 
E) upward and shifts market supply downward. 
A) downward and does not affect market supply. 
B) and market supply downward. 
C) and market supply upward. 
D) downward and shifts market supply upward. 
E) upward and shifts market supply downward.

Question 12

The change in variable costs that results from producing one more unit of output is called

Accepted Answer

A) marginal variable cost. 
B) average variable cost. 
C) total variable cost. 
D) marginal cost. 
E) marginal product. 
A) marginal variable cost. 
B) average variable cost. 
C) total variable cost. 
D) marginal cost. 
E) marginal product.

Question 13

The slope of the total cost curve is called

Accepted Answer

A) diminishing returns. 
B) marginal cost. 
C) marginal product. 
D) marginal benefit. 
E) total product. 
A) diminishing returns. 
B) marginal cost. 
C) marginal product. 
D) marginal benefit. 
E) total product.

Question 14

A production function shows the relationship between

Accepted Answer

A) variable costs and total costs. 
B) a fixed input and output. 
C) total output and total costs. 
D) fixed costs and total costs. 
E) a variable input and output. 
A) variable costs and total costs. 
B) a fixed input and output. 
C) total output and total costs. 
D) fixed costs and total costs. 
E) a variable input and output.

Question 15

Total costs include all of the following except

Accepted Answer

A) equipment purchase price. 
B) rent. 
C) salaries. 
D) output purchase price. 
E) materials. 
A) equipment purchase price. 
B) rent. 
C) salaries. 
D) output purchase price. 
E) materials.

Question 16

A price-taking firm cannot affect its own output price because

Accepted Answer

A) price is determined by consumers, not producers. 
B) market demand is perfectly elastic; that is, even a tiny increase in price results in zero quantity demanded. 
C) it is only one firm among many, so the price is determined in the market as a whole. 
D) consumer preferences dictate a single price in a competitive market. 
E) of government statutes, such as price floors and price ceilings. 
A) price is determined by consumers, not producers. 
B) market demand is perfectly elastic; that is, even a tiny increase in price results in zero quantity demanded. 
C) it is only one firm among many, so the price is determined in the market as a whole. 
D) consumer preferences dictate a single price in a competitive market. 
E) of government statutes, such as price floors and price ceilings.

Question 17

Explain why the firm's supply curve is its marginal cost curve.

Accepted Answer

A supply curve indicates how much a firm

Question 18

Total revenue is the price of a good times its quantity.

Accepted Answer

A) True 
 B)False

Question 19

Where does producer surplus get its name? That is, why do economists call it a surplus?

Accepted Answer

Producer surplus is the difference betwe

Exam 6: The Supply Curve and the Behavior of Firms

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

When fertilizer yields diminishing returns in the production of potatoes,

Land is commonly considered a fixed factor of production.

Compute the total revenue, total costs, and profits when the price of a crate of grapes is $80. How many crates of grapes will maximize profits? How does the answer compare to the price equals marginal cost condition?

Exhibit 6-1 -Refer to Exhibit 6-1. The marginal product of the fifth unit of labor is

Exhibit 6-2 -Refer to Exhibit 6-2. The marginal cost of the second pound of bananas is

By definition, a profit-maximizing firm is a monopoly.

Exhibit 6-3 -Refer to Exhibit 6-3. What is the profit-maximizing output level if output price is $16?

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

An improvement in production technology shifts marginal cost

The change in variable costs that results from producing one more unit of output is called

The slope of the total cost curve is called

A production function shows the relationship between

Total costs include all of the following except

A price-taking firm cannot affect its own output price because

Explain why the firm's supply curve is its marginal cost curve.

Total revenue is the price of a good times its quantity.

Where does producer surplus get its name? That is, why do economists call it a surplus?

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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