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

"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 3

​  
-Green Duck Airways is considering adding a new flight between Portland and Seattle.Revenue from the flight is expected to be $8,000.The total cost of the flight is $9,500, and the variable cost is $4,000.Should the airline add this flight?

Accepted Answer

A) No, because the revenue of $8,000 is less than the cost of $9,500. 
B) No, the addition to profit is too small to devote the aircraft to the flight. 
C) Yes, profit increases by $4,000. 
D) Yes, profit increases by $2,500. 
A) No, because the revenue of $8,000 is less than the cost of $9,500. 
B) No, the addition to profit is too small to devote the aircraft to the flight. 
C) Yes, profit increases by $4,000. 
D) Yes, profit increases by $2,500.

Question 4

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

Accepted Answer

A) total profits stay constant. 
B) total profits will decline. 
C) marginal profit will be positive. 
D) MR will be increasing. 
A) total profits stay constant. 
B) total profits will decline. 
C) marginal profit will be positive. 
D) MR will be increasing.

Question 5

Marginal profit is the addition to a firm's total profit from a

Accepted Answer

A) $1 change in its price. 
B) one-unit change in its output. 
C) reduction in total cost. 
D) reduction in marginal cost. 
A) $1 change in its price. 
B) one-unit change in its output. 
C) reduction in total cost. 
D) reduction in marginal cost.

Question 6

Marginal profit is the profit

Accepted Answer

A) earned by a firm that is about to go out of business. 
B) calculated directly from the total cost curve. 
C) that is added by a one-unit increase in total output. 
D) earned for each dollar of cost increase. 
A) earned by a firm that is about to go out of business. 
B) calculated directly from the total cost curve. 
C) that is added by a one-unit increase in total output. 
D) earned for each dollar of cost increase.

Question 7

​  
-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 8

Business people often use "hunches" and intuition to make decisions regarding what to produce.

Accepted Answer

A) True 
 B)False

Question 9

Suppose that on a Saturday night at 10 pm, 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 10

Decision making that seeks only solutions that are acceptable is called

Accepted Answer

A) optimizing. 
B) satisficing. 
C) benchmarking. 
D) maximizing. 
A) optimizing. 
B) satisficing. 
C) benchmarking. 
D) maximizing.

Question 11

A firm can use its demand curve to calculate

Accepted Answer

A) total revenue. 
B) economic profit. 
C) production costs. 
D) accounting profit. 
A) total revenue. 
B) economic profit. 
C) production costs. 
D) accounting profit.

Question 12

If marginal cost of an additional unit of output is greater than average cost, then average cost will rise.

Accepted Answer

A) True 
 B)False

Question 13

If a profit-maximizing firm's fixed cost of producing widgets falls,

Accepted Answer

A) its total cost curve is unaffected. 
B) its marginal cost curve shifts down. 
C) the firm will produce more widgets. 
D) the firm's average profit per widget produced rises. 
A) its total cost curve is unaffected. 
B) its marginal cost curve shifts down. 
C) the firm will produce more widgets. 
D) the firm's average profit per widget produced rises.

Question 14

Profit is maximized at the output at which marginal revenue equals marginal cost.

Accepted Answer

A) True 
 B)False

Question 15

If the average cost of a product is $10 per unit and the price is $5, the firm is losing money.

Accepted Answer

A) True 
 B)False

Question 16

Optimal decisions are made on the basis of

Accepted Answer

A) rate of growth in total profit. 
B) average cost and average revenue figures. 
C) impact on market share. 
D) marginal cost and marginal revenue figures. 
A) rate of growth in total profit. 
B) average cost and average revenue figures. 
C) impact on market share. 
D) marginal cost and marginal revenue figures.

Question 17

Total profit is maximized where

Accepted Answer

A) MR = MC. 
B) marginal profit is zero. 
C) the slope of the marginal profit curve is zero. 
D) All of the responses are correct. 
A) MR = MC. 
B) marginal profit is zero. 
C) the slope of the marginal profit curve is zero. 
D) All of the responses are correct.

Question 18

Distinguish between the economist's definition of profit and the accountant's definition.Which is superior for decision making?

Accepted Answer

Accounting profit is revenue minus actua

Question 19

Maureen left her teaching job, which paid $30,000 per year, and invested $20,000 of her retirement fund (which was earning 10 percent interest) in a new real estate business.Her accountant predicted a $60,000 revenue the first year.Her husband, an economist, forecast her profit to be

Accepted Answer

A) $10,000. 
B) $28,000. 
C) $32,000. 
D) $60,000. 
A) $10,000. 
B) $28,000. 
C) $32,000. 
D) $60,000.

Question 20

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.

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.

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

​ -Green Duck Airways is considering adding a new flight between Portland and Seattle.Revenue from the flight is expected to be $8,000.The total cost of the flight is $9,500, and the variable cost is $4,000.Should the airline add this flight?

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

Marginal profit is the addition to a firm's total profit from a

Marginal profit is the profit

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

Business people often use "hunches" and intuition to make decisions regarding what to produce.

Decision making that seeks only solutions that are acceptable is called

A firm can use its demand curve to calculate

If marginal cost of an additional unit of output is greater than average cost, then average cost will rise.

If a profit-maximizing firm's fixed cost of producing widgets falls,

Profit is maximized at the output at which marginal revenue equals marginal cost.

If the average cost of a product is $10 per unit and the price is $5, the firm is losing money.

Optimal decisions are made on the basis of

Total profit is maximized where

Distinguish between the economist's definition of profit and the accountant's definition.Which is superior for decision making?

Maureen left her teaching job, which paid $30,000 per year, and invested $20,000 of her retirement fund (which was earning 10 percent interest) in a new real estate business.Her accountant predicted a $60,000 revenue the first year.Her husband, an economist, forecast her profit to be

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

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

Filters

-Green Duck Airways is considering adding a new flight between Portland and Seattle.Revenue from the flight is expected to be $8,000.The total cost of the flight is $9,500, and the variable cost is $4,000.Should the airline add this flight?

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