Question 1

Marginal, average, and total figures are bound together.If any two are known, the third can be calculated.

Accepted Answer

A) True 
 B)False

Question 2

By definition, a firm that practices satisficing

Accepted Answer

A)  maximizes its sales, not its profits. 
B)  makes acceptable decisions, though not necessarily optimal ones. 
C)  satisfies government guidelines instead of consumer demands. 
D)  minimizes the cost of gathering enough information to make an optimal decision. 
A)  maximizes its sales, not its profits. 
B)  makes acceptable decisions, though not necessarily optimal ones. 
C)  satisfies government guidelines instead of consumer demands. 
D)  minimizes the cost of gathering enough information to make an optimal decision.

Question 3

A firm that decides to make a price cut assumes that marginal profit is negative.

Accepted Answer

A) True 
 B)False

Question 4

Company A manufactures a single automotive component.It had total revenue of $100,000 and an economic profit of $20,000.What is the price of the component it manufactures?

Accepted Answer

A)  ($100,000/quantity sold). 
B)  ($100,000/quantity produced). 
C)  ($100,000/quantity sold) - average cost of the product 
D)  ($100,000/quantity produced) - average cost of the product 
A)  ($100,000/quantity sold). 
B)  ($100,000/quantity produced). 
C)  ($100,000/quantity sold) - average cost of the product 
D)  ($100,000/quantity produced) - average cost of the product

Question 5

If the marginal profit from increasing output by one unit is negative, then to attain an optimum the firm should

Accepted Answer

A)  increase output until marginal profit equals zero. 
B)  reduce output until marginal profit equals zero. 
C)  increase output until marginal profit is maximized. 
D)  reduce output until marginal profit is maximized. 
A)  increase output until marginal profit equals zero. 
B)  reduce output until marginal profit equals zero. 
C)  increase output until marginal profit is maximized. 
D)  reduce output until marginal profit is maximized.

Question 6

For a number of years, General Motors used a pricing strategy designed to maintain at least 40 percent of the American car market.Does this strategy suggest that GM was maximizing profits or pursuing an alternative strategy?

Accepted Answer

Pursuing market share is not the same th

Question 7

Sally leaves her $24,000 secretarial position with a company and invests her savings of $15,000 (on which she was earning 6 percent interest) in her own Ready Sec agency.After expenses, her net income was $28,900.Her economic profit was

Accepted Answer

A)  $4,900. 
B)  $4,000. 
C)  $28,900. 
D)  -$10,100. 
A)  $4,900. 
B)  $4,000. 
C)  $28,900. 
D)  -$10,100.

Question 8

If a firm's marginal profit is negative, it should reduce its output level.

Accepted Answer

A) True 
 B)False

Question 9

Table 8-1
 $ \begin{array}{lcccccr}\text { Output (units) } & 0 & 1 & 2 & 3 & 4 & 5 \ \text { Total Revenue (\$) } & 0 & 9 & 16 & 21 & 27 & 31 \ \text { Total Cost }(\$) & 10 & 12 & 15 & 19 & 26 & 35\end{array} $
-At optimal output, the firm described in Table 8-1 earns a profit of

Accepted Answer

A)  $1 per unit of output. 
B)  $2 per unit of output. 
C)  $1 total. 
D)  $2 total. 
A)  $1 per unit of output. 
B)  $2 per unit of output. 
C)  $1 total. 
D)  $2 total.

Exam 8: Output, Price, and Profit: The Importance of Marginal Analysis

Marginal, average, and total figures are bound together.If any two are known, the third can be calculated.

By definition, a firm that practices satisficing

A firm that decides to make a price cut assumes that marginal profit is negative.

Company A manufactures a single automotive component.It had total revenue of $100,000 and an economic profit of $20,000.What is the price of the component it manufactures?

If the marginal profit from increasing output by one unit is negative, then to attain an optimum the firm should

For a number of years, General Motors used a pricing strategy designed to maintain at least 40 percent of the American car market.Does this strategy suggest that GM was maximizing profits or pursuing an alternative strategy?

Sally leaves her $24,000 secretarial position with a company and invests her savings of $15,000 (on which she was earning 6 percent interest) in her own Ready Sec agency.After expenses, her net income was $28,900.Her economic profit was

If a firm's marginal profit is negative, it should reduce its output level.

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 I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

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

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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