Question 1

For any firm, price always equals

Accepted Answer

A) average revenue. 
B) marginal revenue. 
C) marginal cost. 
D) marginal profit. 
A) average revenue. 
B) marginal revenue. 
C) marginal cost. 
D) marginal profit.

Question 2

If at optimum output of 1,000 units, the firm is incurring average variable cost per unit of $3, average fixed cost per unit of $1.50, and selling its output at $7 per unit, total profit is

Accepted Answer

A) $7,000. 
B) $2,500. 
C) $1,500. 
D) $250. 
A) $7,000. 
B) $2,500. 
C) $1,500. 
D) $250.

Question 3

A graph of total profits is always likely to be positively sloped throughout its length.

Accepted Answer

A) True 
 B)False

Question 4

Accounting profit is usually smaller than economic profit.

Accepted Answer

A) True 
 B)False

Question 5

Table 8-2
  
-In Table 8-2, the profit-maximizing level of output is

Accepted Answer

A) 6. 
B) 10. 
C) 16. 
D) 21. 
A) 6. 
B) 10. 
C) 16. 
D) 21.

Question 6

If a firm's average cost is currently $100, and the marginal cost is $95, then the average cost is currently falling.

Accepted Answer

A) True 
 B)False

Question 7

Marginal profit is the slope of the total profit curve.

Accepted Answer

A) True 
 B)False

Question 8

In the case study in the text involving calculator production, the fact that each calculator produced added $10.30 to cost and $12 to revenue made clear the value of ____ in determining whether or not to suspend production.

Accepted Answer

A) average fixed cost 
B) cost saving 
C) marginal analysis 
D) the level of fixed cost 
A) average fixed cost 
B) cost saving 
C) marginal analysis 
D) the level of fixed cost

Question 9

A firm has positive fixed cost and positive variable cost.At its current level of output, marginal cost equals average cost.The firm must

Accepted Answer

A) not be producing at its profit-maximizing level of output. 
B) be producing the quantity that minimizes average cost. 
C) be operating at a point at which total variable cost equals total fixed cost. 
D) be earning negative profit. 
A) not be producing at its profit-maximizing level of output. 
B) be producing the quantity that minimizes average cost. 
C) be operating at a point at which total variable cost equals total fixed cost. 
D) be earning negative profit.

Question 10

Table 8-1
  
-At optimal output, the firm described in Table 8-1 sells its output at a price of

Accepted Answer

A) $5.40. 
B) $6.25. 
C) $7. 
D) $8. 
A) $5.40. 
B) $6.25. 
C) $7. 
D) $8.

Question 11

If at an output of 4,000 units Sloan Company is making an economic profit and marginal profit is $20 per unit, the firm should

Accepted Answer

A) reduce output to maximize total profit. 
B) increase output until marginal profit falls to zero. 
C) do whatever is necessary to increase marginal profit. 
D) There is not enough information to make a decision. 
A) reduce output to maximize total profit. 
B) increase output until marginal profit falls to zero. 
C) do whatever is necessary to increase marginal profit. 
D) There is not enough information to make a decision.

Question 12

"Satisficing" rather than "maximizing" primarily emerges under conditions where

Accepted Answer

A) information is costly. 
B) management lacks ambition. 
C) profit maximization is rejected on moral grounds. 
D) risk is minimal. 
A) information is costly. 
B) management lacks ambition. 
C) profit maximization is rejected on moral grounds. 
D) risk is minimal.

Question 13

Marginal cost curves and average cost curves are both purely upward sloping.

Accepted Answer

A) True 
 B)False

Question 14

Economists use a model that is a literal description of business' behavior.

Accepted Answer

A) True 
 B)False

Question 15

A grocery store sells soup for $1.50 a can, or $2.50 for two cans.To a customer, the marginal cost of buying the second can of soup is

Accepted Answer

A) $1. 
B) $1.25. 
C) $1.50. 
D) $2.50. 
A) $1. 
B) $1.25. 
C) $1.50. 
D) $2.50.

Question 16

If MC > MR,

Accepted Answer

A) output should be reduced. 
B) marginal profit is positive. 
C) there are losses. 
D) output should be increased. 
A) output should be reduced. 
B) marginal profit is positive. 
C) there are losses. 
D) output should be increased.

Question 17

Which of the following is true if the opportunity cost of producing a particular good is less than its accounting profit?

Accepted Answer

A) Economic profit is zero. 
B) Economic profit is negative. 
C) Economic profit is positive. 
D) Economic profit cannot be determined. 
A) Economic profit is zero. 
B) Economic profit is negative. 
C) Economic profit is positive. 
D) Economic profit cannot be determined.

Question 18

Figure 8-4  
-In Figure 8-4 at output level 2,

Accepted Answer

A) MR > MC. 
B) the slope of the total profit curve is negative. 
C) there are negative profits. 
D) marginal revenue is rising compared to output. 
A) MR > MC. 
B) the slope of the total profit curve is negative. 
C) there are negative profits. 
D) marginal revenue is rising compared to output.

Question 19

Suppose that on a Saturday night at 10pm a large hotel has 300 vacant rooms, with little expectation of renting them at such a late hour on a weekend.A traveler comes in the door, looking a bit down on his luck, and asks how much a room will cost.Since he can't afford the normal rate of $150, the night manager decides to let him stay in the room for only $40.Is it likely that this decision reduced, or increased, the hotel's profits? Explain your answer.

Accepted Answer

Marginal analysis can help answer this q

Question 20

What is the value of marginal profit at the profit-maximizing output?

Accepted Answer

Marginal profit is the difference betwee

Exam 8: Output Price and Profit the Importance of Marginal Analysis

For any firm, price always equals

If at optimum output of 1,000 units, the firm is incurring average variable cost per unit of $3, average fixed cost per unit of $1.50, and selling its output at $7 per unit, total profit is

A graph of total profits is always likely to be positively sloped throughout its length.

Accounting profit is usually smaller than economic profit.

Table 8-2 -In Table 8-2, the profit-maximizing level of output is

If a firm's average cost is currently $100, and the marginal cost is $95, then the average cost is currently falling.

Marginal profit is the slope of the total profit curve.

In the case study in the text involving calculator production, the fact that each calculator produced added $10.30 to cost and $12 to revenue made clear the value of ____ in determining whether or not to suspend production.

A firm has positive fixed cost and positive variable cost.At its current level of output, marginal cost equals average cost.The firm must

Table 8-1 -At optimal output, the firm described in Table 8-1 sells its output at a price of

If at an output of 4,000 units Sloan Company is making an economic profit and marginal profit is $20 per unit, the firm should

"Satisficing" rather than "maximizing" primarily emerges under conditions where

Marginal cost curves and average cost curves are both purely upward sloping.

Economists use a model that is a literal description of business' behavior.

A grocery store sells soup for $1.50 a can, or $2.50 for two cans.To a customer, the marginal cost of buying the second can of soup is

If MC > MR,

Which of the following is true if the opportunity cost of producing a particular good is less than its accounting profit?

Figure 8-4 -In Figure 8-4 at output level 2,

What is the value of marginal profit at the profit-maximizing output?

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand an Initial Look

Consumer Choice Individual and Market Demand

Demand and Elasticity

Production Inputs and Cost Building Blocks for Supply Analysis

Securities Business Finance and the Economy the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power Regulation and Antitrust

The Case for Free Markets the Price System

The Shortcomings of Free Markets

Externalities the Environment and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship the Human Inputs

Poverty Inequality and Discrimination

Is Us Economic Leadership Threatened

International Trade and Comparative Advantage

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