Question 1

A separate average revenue curve is not required when you have the demand curve for a firm.Explain.

Accepted Answer

Demand curve itself is the average reven

Question 2

The state is considering adding a satellite campus to its major university.How can marginal analysis assist, even though the university does not attempt to maximize profits?

Accepted Answer

Marginal analysis provides the general r

Question 3

Marginal, average, and total figures are unrelated.

Accepted Answer

A) True 
 B)False

Question 4

Whenever average cost exceeds marginal cost,

Accepted Answer

A) average cost is rising. 
B) average cost is falling. 
C) marginal cost is rising. 
D) marginal cost is falling. 
A) average cost is rising. 
B) average cost is falling. 
C) marginal cost is rising. 
D) marginal cost is falling.

Question 5

Average cost can be thought of as the cost per unit.

Accepted Answer

A) True 
 B)False

Question 6

The demand curve facing a firm is also the firm's

Accepted Answer

A) total utility curve. 
B) average revenue curve. 
C) average utility curve. 
D) total revenue curve. 
A) total utility curve. 
B) average revenue curve. 
C) average utility curve. 
D) total revenue curve.

Question 7

Explain whether a firm's decisions are optimal if economic profit is (a) positive, (b) zero, or (c) negative.

Accepted Answer

If economic profit is positive, then the

Question 8

If marginal cost is rising, then average cost must be rising.

Accepted Answer

A) True 
 B)False

Question 9

Marginal cost

Accepted Answer

A) equals the slope of the total cost curve. 
B) is calculated as DTC/DQ. 
C) is the increase in total cost resulting from a one-unit increase in output. 
D) All of the above are correct. 
A) equals the slope of the total cost curve. 
B) is calculated as DTC/DQ. 
C) is the increase in total cost resulting from a one-unit increase in output. 
D) All of the above are correct.

Question 10

A firm should use marginal analysis when making a price-output decision.

Accepted Answer

A) True 
 B)False

Question 11

Joe and Ed go to a diner that sells hamburgers for $5 and hot dogs for $3.They agree to split the lunch bill evenly.Ed chooses a hot dog.The marginal cost to Joe then of ordering a hamburger instead of a hot dog is

Accepted Answer

A) $1. 
B) $2. 
C) $2.50. 
D) $3. 
A) $1. 
B) $2. 
C) $2.50. 
D) $3.

Question 12

Given total cost and the quantity of output, marginal cost and average cost can be determined.

Accepted Answer

A) True 
 B)False

Question 13

If marginal profit is zero, then total profit is at a maximum.

Accepted Answer

A) True 
 B)False

Question 14

The assumption that firms attempt to maximize profits will yield good predictions even if firms sometimes pursue other goals.

Accepted Answer

A) True 
 B)False

Question 15

Marginal analysis is useful in economics, but not in other areas of life.

Accepted Answer

A) True 
 B)False

Question 16

Figure 8-5  
-From Figure 8-5 one can deduce

Accepted Answer

A) TR = TC at outputs 10 and 60. 
B) MR = MC at output 35. 
C) TFC = 100. 
D) All of the above are correct. 
A) TR = TC at outputs 10 and 60. 
B) MR = MC at output 35. 
C) TFC = 100. 
D) All of the above are correct.

Question 17

In the case study discussed in the chapter, the electronics firm was losing money by selling its calculators at a price that was below average cost.

Accepted Answer

A) True 
 B)False

Question 18

If output is increased beyond the point where total profit is maximized,

Accepted Answer

A) marginal profit will be zero. 
B) marginal profit will be negative. 
C) marginal profit will be positive. 
D) MR > MC. 
A) marginal profit will be zero. 
B) marginal profit will be negative. 
C) marginal profit will be positive. 
D) MR > MC.

Question 19

An airline is considering adding a flight from Chicago to Sioux Falls.Total cost of the flight is $5,500.Variable cost is $2,000.Revenue from the flight is expected to be $3,000.Should the flight be added?

Accepted Answer

A) No, the revenue ($3,000) is below the cost ($5,500.) 
B) No, the addition to profit is very small and not worth the effort. 
C) Yes, profit increases by $1,000 ($3,000 − $2,000.) 
D) Yes, profit increases by $3,000. 
A) No, the revenue ($3,000) is below the cost ($5,500.) 
B) No, the addition to profit is very small and not worth the effort. 
C) Yes, profit increases by $1,000 ($3,000 − $2,000.) 
D) Yes, profit increases by $3,000.

Question 20

It can be shown that average revenue and price are always equal.

Accepted Answer

A) True 
 B)False

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

A separate average revenue curve is not required when you have the demand curve for a firm.Explain.

The state is considering adding a satellite campus to its major university.How can marginal analysis assist, even though the university does not attempt to maximize profits?

Marginal, average, and total figures are unrelated.

Whenever average cost exceeds marginal cost,

Average cost can be thought of as the cost per unit.

The demand curve facing a firm is also the firm's

Explain whether a firm's decisions are optimal if economic profit is (a) positive, (b) zero, or (c) negative.

If marginal cost is rising, then average cost must be rising.

Marginal cost

A firm should use marginal analysis when making a price-output decision.

Joe and Ed go to a diner that sells hamburgers for $5 and hot dogs for $3.They agree to split the lunch bill evenly.Ed chooses a hot dog.The marginal cost to Joe then of ordering a hamburger instead of a hot dog is

Given total cost and the quantity of output, marginal cost and average cost can be determined.

If marginal profit is zero, then total profit is at a maximum.

The assumption that firms attempt to maximize profits will yield good predictions even if firms sometimes pursue other goals.

Marginal analysis is useful in economics, but not in other areas of life.

Figure 8-5 -From Figure 8-5 one can deduce

In the case study discussed in the chapter, the electronics firm was losing money by selling its calculators at a price that was below average cost.

If output is increased beyond the point where total profit is maximized,

An airline is considering adding a flight from Chicago to Sioux Falls.Total cost of the flight is $5,500.Variable cost is $2,000.Revenue from the flight is expected to be $3,000.Should the flight be added?

It can be shown that average revenue and price are always equal.

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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