Question 1

The added revenue that a firm takes in when it increases output by one additional unit is ________ revenue.

Accepted Answer

A)  total 
B)  marginal 
C)  variable 
D)  fixed 
A)  total 
B)  marginal 
C)  variable 
D)  fixed

Question 2

Refer to the information provided in Figure 8.8 below to answer the question(s) that follow.   Figure 8.8
-Refer to Figure 8.8. If this farmer produces the profit-maximizing level of soybeans when the market price is $8 per bushel, then her total cost would be

Accepted Answer

A)  $1,200. 
B)  $2,800. 
C)  $5,600. 
D)  $8,400. 
A)  $1,200. 
B)  $2,800. 
C)  $5,600. 
D)  $8,400.

Question 3

Average total cost and average variable cost are minimized at the same level of output.

Accepted Answer

A) True 
 B)False

Question 4

Refer to the information provided in Table 8.3 below to answer the question(s) that follow.
Table 8.3 $\text {Number of}$
$\begin{array}{llllllll}
\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\
\hline0 & & & & 
&& \
1 & 20& & & & \
2 & & 10& & & &30& \
3 & & &  & 110&& \
4 & & &20 & & & \
5 & & & &180 &\
\hline
\end{array}$

-Refer to Table 8.3. What is the total cost of producing zero units of output?

Accepted Answer

A)  $0 
B)  $30 
C)  $60 
D)  indeterminate from the given information 
A)  $0 
B)  $30 
C)  $60 
D)  indeterminate from the given information

Question 5

Corn is produced in a perfectly competitive market. The demand for ethanol decreases. This will cause the individual corn farmerʹs marginal revenue to ________ and their profit-maximizing level of output to ________.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; decrease

Question 6

Refer to the information provided in Figure 8.11 below to answer the question(s) that follow.   Figure 8.11
-Refer to Figure 8.11. Assuming the wool market (industry) is perfectly competitive and the industry consists of 100 firms of identical size, each firm would produce an average of ________ pounds of wool and sell the wool for ________ per pound.

Accepted Answer

A)  50; $0.03 
B)  5,000; $3.00 
C)  5,000; $0.03 
D)  50; $3.00 
A)  50; $0.03 
B)  5,000; $3.00 
C)  5,000; $0.03 
D)  50; $3.00

Question 7

Average fixed costs rise continuously as quantity of output rises.

Accepted Answer

A) True 
 B)False

Question 8

If there is a decrease in industry supply while the industry demand curve remains the same, then an individual firm in a perfectly competitive industry currently earning profits will see its profits

Accepted Answer

A)  increase. 
B)  not change. 
C)  decrease. 
D)  impossible to determine. 
A)  increase. 
B)  not change. 
C)  decrease. 
D)  impossible to determine.

Question 9

Related to the Economics in Practice on page 176: When there are a few unsold seats in an arena for a rock concert, the marginal cost of filling those seats

Accepted Answer

A)  is probably close to zero. 
B)  will be negative. 
C)  is generally quite high. 
D)  will primarily depend on the number of people waiting to get the seats. 
A)  is probably close to zero. 
B)  will be negative. 
C)  is generally quite high. 
D)  will primarily depend on the number of people waiting to get the seats.

Question 10

In the short run, marginal cost is positive and increasing at output levels where total variable cost is ________ at a(n) ________ rate.

Accepted Answer

A)  increasing; increasing 
B)  increasing; decreasing 
C)  decreasing; increasing 
D)  decreasing; decreasing 
A)  increasing; increasing 
B)  increasing; decreasing 
C)  decreasing; increasing 
D)  decreasing; decreasing

Question 11

Refer to the information provided in Table 8.2 below to answer the question(s) that follow.
Table 8.2 $\text {Number of}$

$\begin{array}{llllllll}
\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\
\hline0 & & & & 
&100 & \
1 & & 50 & & & \
2 & & & & & &&95 \
3 & & & 46.67 & & \
4 & & & & &300 & \
5 & 270 & & &\
\hline
\end{array}$

-Refer to Table 8.2. If Sherry produces two pairs of earrings, her marginal cost is

Accepted Answer

A)  $40. 
B)  $45. 
C)  $72.50. 
D)  $122.50. 
A)  $40. 
B)  $45. 
C)  $72.50. 
D)  $122.50.

Question 12

Refer to the information provided in Figure 8.6 below to answer the question(s) that follow.   Figure 8.6
-Refer to Figure 8.6. Curve 2 is Outdoor Equipment's

Accepted Answer

A)  marginal cost curve. 
B)  average variable cost curve. 
C)  average total cost curve. 
D)  average fixed cost curve. 
A)  marginal cost curve. 
B)  average variable cost curve. 
C)  average total cost curve. 
D)  average fixed cost curve.

Question 13

Any firmʹs ________ equals P × q.

Accepted Answer

A)  total cost 
B)  total revenue 
C)  marginal revenue 
D)  marginal cost 
A)  total cost 
B)  total revenue 
C)  marginal revenue 
D)  marginal cost

Question 14

If there is an increase in industry supply while the industry demand curve remains the same, then an individual firm in a perfectly competitive industry currently earning positive profits will see its profits

Accepted Answer

A)  increase. 
B)  not change. 
C)  decrease. 
D)  impossible to determine 
A)  increase. 
B)  not change. 
C)  decrease. 
D)  impossible to determine

Question 15

If an individual perfectly competitive firm charges a price above the industry equilibrium price, it will

Accepted Answer

A)  sell all that it can produce and gain equal revenue with competitors. 
B)  sell all that it can produce and gain more revenue than competitors. 
C)  sell part of what it can produce and gain less revenue than competitors will. 
D)  not sell any of what it produces. 
A)  sell all that it can produce and gain equal revenue with competitors. 
B)  sell all that it can produce and gain more revenue than competitors. 
C)  sell part of what it can produce and gain less revenue than competitors will. 
D)  not sell any of what it produces.

Question 16

A perfectly competitive firm will earn positive economic profits in the range of output for which the firm's price is ________ its minimum average total cost.

Accepted Answer

A)  below 
B)  above 
C)  equal to 
D)  below its marginal cost and 
A)  below 
B)  above 
C)  equal to 
D)  below its marginal cost and

Question 17

The production decision is a short-run decision.

Accepted Answer

A) True 
 B)False

Question 18

Profit-maximizing firms want to ________ the difference between total revenue and total cost.

Accepted Answer

A)  minimize 
B)  maximize 
C)  equalize 
D)  eliminate 
A)  minimize 
B)  maximize 
C)  equalize 
D)  eliminate

Question 19

Refer to the information provided in Table 8.5 below to answer the question(s) that follow.
Table 8.5
 $$\begin{array} { c c c c c c c c } 
\hline \begin{array} { c } 
\text { Number of } \
\text { Swords }
\end{array} & \text { TVC } & \text { MC } & \text { AVC } & \text { TFC } & \text { TC } & \text { AFC } & \text { ATC } \
\hline 0 & & & & & 50 & \
\hline 1 & & 25 & & & & & \
\hline 2 & & & & & &&47.50 \
\hline 3 & & & 23.33 & & & \
\hline 4 & & & & & 150 & & \
\hline 5 & 135 & & & & & & \
\hline
\end{array}$$
-Refer to Table 8.5. If Phoebe produces four swords, her average fixed costs are

Accepted Answer

A)  $2. 
B)  $10. 
C)  $12.50. 
D)  $50. 
A)  $2. 
B)  $10. 
C)  $12.50. 
D)  $50.

Question 20

Refer to the information provided in Table 8.2 below to answer the question(s) that follow.
Table 8.2 $\text {Number of}$

$\begin{array}{llllllll}
\text {Earrings}&\text { TVC}&\text { MC }&\text {AVC}&\text { TFC }&\text {TC}&\text { AFC}&\text { ATC}\
\hline0 & & & & 
&100 & \
1 & & 50 & & & \
2 & & & & & &&95 \
3 & & & 46.67 & & \
4 & & & & &300 & \
5 & 270 & & &\
\hline
\end{array}$

-Refer to Table 8.2. If Sherry produces three pairs of earrings, her total variable costs are

Accepted Answer

A)  $26.67. 
B)  $140. 
C)  $175. 
D)  $225. 
A)  $26.67. 
B)  $140. 
C)  $175. 
D)  $225.

Exam 8: Short-Run Costs and Output Decisions

The added revenue that a firm takes in when it increases output by one additional unit is ________ revenue.

Refer to the information provided in Figure 8.8 below to answer the question(s) that follow. Figure 8.8 -Refer to Figure 8.8. If this farmer produces the profit-maximizing level of soybeans when the market price is $8 per bushel, then her total cost would be

Average total cost and average variable cost are minimized at the same level of output.

Refer to the information provided in Table 8.3 below to answer the question(s) that follow. Table 8.3 Number of\text {Number of}Number of Earrings TVC MC AVC TFC TC AFC ATC 0 1 20 2 10 30 3 110 4 20 5 180 -Refer to Table 8.3. What is the total cost of producing zero units of output?

Corn is produced in a perfectly competitive market. The demand for ethanol decreases. This will cause the individual corn farmerʹs marginal revenue to ________ and their profit-maximizing level of output to ________.

Average fixed costs rise continuously as quantity of output rises.

If there is a decrease in industry supply while the industry demand curve remains the same, then an individual firm in a perfectly competitive industry currently earning profits will see its profits

Related to the Economics in Practice on page 176: When there are a few unsold seats in an arena for a rock concert, the marginal cost of filling those seats

In the short run, marginal cost is positive and increasing at output levels where total variable cost is ________ at a(n) ________ rate.

Refer to the information provided in Table 8.2 below to answer the question(s) that follow. Table 8.2 Number of\text {Number of}Number of Earrings TVC MC AVC TFC TC AFC ATC 0 100 1 50 2 95 3 46.67 4 300 5 270 -Refer to Table 8.2. If Sherry produces two pairs of earrings, her marginal cost is

Refer to the information provided in Figure 8.6 below to answer the question(s) that follow. Figure 8.6 -Refer to Figure 8.6. Curve 2 is Outdoor Equipment's

Any firmʹs ________ equals P × q.

If there is an increase in industry supply while the industry demand curve remains the same, then an individual firm in a perfectly competitive industry currently earning positive profits will see its profits

If an individual perfectly competitive firm charges a price above the industry equilibrium price, it will

A perfectly competitive firm will earn positive economic profits in the range of output for which the firm's price is ________ its minimum average total cost.

The production decision is a short-run decision.

Profit-maximizing firms want to ________ the difference between total revenue and total cost.

Refer to the information provided in Table 8.5 below to answer the question(s) that follow. Table 8.5 Number of Swords TVC MC AVC TFC TC AFC ATC 0 50 1 25 2 47.50 3 23.33 4 150 5 135 -Refer to Table 8.5. If Phoebe produces four swords, her average fixed costs are

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Elasticity

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Refer to the information provided in Table 8.3 below to answer the question(s) that follow. Table 8.3 $\text {Number of}$ Earrings TVC MC AVC TFC TC AFC ATC 0 1 20 2 10 30 3 110 4 20 5 180 -Refer to Table 8.3. What is the total cost of producing zero units of output?

Corn is produced in a perfectly competitive market. The demand for ethanol decreases. This will cause the individual corn farmerʹs marginal revenue to and their profit-maximizing level of output to .

In the short run, marginal cost is positive and increasing at output levels where total variable cost is at a(n) rate.

Refer to the information provided in Table 8.2 below to answer the question(s) that follow. Table 8.2 $\text {Number of}$ Earrings TVC MC AVC TFC TC AFC ATC 0 100 1 50 2 95 3 46.67 4 300 5 270 -Refer to Table 8.2. If Sherry produces two pairs of earrings, her marginal cost is