Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Marginal profit is positive at all positive output levels.

Accepted Answer

A) True 
 B)False

Question 3

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 4

Total profit = Total revenue − Total cost (including opportunity cost). Total profit defined in this way is called

Accepted Answer

A) accounting profit. 
B) economic profit. 
C) absolute profit. 
D) relative profit. 
A) accounting profit. 
B) economic profit. 
C) absolute profit. 
D) relative profit.

Question 5

If the output of a firm is increased by one unit, the revenue addition is called

Accepted Answer

A) total revenue. 
B) average revenue. 
C) marginal revenue. 
D) economic profit. 
A) total revenue. 
B) average revenue. 
C) marginal revenue. 
D) economic profit.

Question 6

Average revenue is slightly higher than price.

Accepted Answer

A) True 
 B)False

Question 7

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 responses 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 responses are correct.

Question 8

Marginal revenue equals the change in total revenue that is earned by selling one more unit of output.

Accepted Answer

A) True 
 B)False

Question 9

Some companies follow a strategy of sales maximization.They say that this puts them in close touch with their customers and they can better track the market, responding to needs more quickly.However, this increases costs because of the need to stock a wider variety of parts, sizes, colors, etc.What would make this strategy a profit-maximizing one?

Accepted Answer

The increase in reve

Question 10

Complete the following table and determine the point of profit maximization.

Accepted Answer

@#IMG-DLM& ​
The profit-maximizing output is Q = 1

Question 11

Economists and accountants have very different definitions of profit.

Accepted Answer

A) True 
 B)False

Question 12

Profit maximization occurs when MC = MR.

Accepted Answer

A) True 
 B)False

Question 13

Profits will be maximized when the slope of the total revenue curve and the slope of the total cost curve are equal.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

In arriving at the quantity of output and price of its product, a company

Accepted Answer

A) chooses either output or price, and consumer demand determines the other. 
B) has no control over either quantity or price. 
C) makes two decisions by setting both optimal output and optimal price. 
D) generally leaves both quantity and price decisions to consumers. 
A) chooses either output or price, and consumer demand determines the other. 
B) has no control over either quantity or price. 
C) makes two decisions by setting both optimal output and optimal price. 
D) generally leaves both quantity and price decisions to consumers.

Question 16

Any change in a firm's fixed costs will change its profit-maximizing level of output.

Accepted Answer

A) True 
 B)False

Question 17

Given a demand curve, explain how total revenue may be calculated.

Accepted Answer

A demand curve consists of the prices an

Question 18

Regarding the relationship between marginal profit and average profit, which of the following statements is NOT true?

Accepted Answer

A) If the average profit is rising, the marginal profit figure must be rising. 
B) If marginal profit is lower than average profit, then average profit must decrease when profit increases. 
C) If marginal profit is below average profit, the average profit decreases. 
D) All of these statements are true. 
A) If the average profit is rising, the marginal profit figure must be rising. 
B) If marginal profit is lower than average profit, then average profit must decrease when profit increases. 
C) If marginal profit is below average profit, the average profit decreases. 
D) All of these statements are true.

Question 19

Table 8-3  
-Explain how much the firm shown in Table 8-3 should produce, first using total profit and then using marginal analysis.

Accepted Answer

Total profit is total revenue minus tota

Question 20

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.

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

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

Marginal profit is positive at all positive output levels.

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?

Total profit = Total revenue − Total cost (including opportunity cost). Total profit defined in this way is called

If the output of a firm is increased by one unit, the revenue addition is called

Average revenue is slightly higher than price.

Marginal cost

Marginal revenue equals the change in total revenue that is earned by selling one more unit of output.

Complete the following table and determine the point of profit maximization.

Economists and accountants have very different definitions of profit.

Profit maximization occurs when MC = MR.

Profits will be maximized when the slope of the total revenue curve and the slope of the total cost curve are equal.

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

In arriving at the quantity of output and price of its product, a company

Any change in a firm's fixed costs will change its profit-maximizing level of output.

Given a demand curve, explain how total revenue may be calculated.

Regarding the relationship between marginal profit and average profit, which of the following statements is NOT true?

Table 8-3 -Explain how much the firm shown in Table 8-3 should produce, first using total profit and then using marginal analysis.

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

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

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