Question 1

Total revenue

Accepted Answer

A) can be calculated directly from the demand curve. 
B) can be calculated directly from the average revenue curve. 
C) is found by multiplying price times quantity. 
D) All of the responses are correct. 
A) can be calculated directly from the demand curve. 
B) can be calculated directly from the average revenue curve. 
C) is found by multiplying price times quantity. 
D) All of the responses are correct.

Question 2

"As long as total revenue slopes up, marginal revenue must slope up also." Explain whether this statement is true or false.

Accepted Answer

Marginal revenue is the slope

Question 3

Economists assume that business firms have many goals, and profit maximization is just one of them.

Accepted Answer

A) True 
 B)False

Question 4

If marginal profit is negative when the firm produces one more unit, then the firm is currently maximizing profits.

Accepted Answer

A) True 
 B)False

Question 5

What rule(s) should a firm follow in deciding optimum output for profit maximization?

Accepted Answer

The firm should expand its output as lon

Question 6

A firm is producing 2,500 units at its optimal output, with average variable cost per unit of $4 and average fixed cost per unit of $2.50.If sells its output at $8 per unit, total profit is

Accepted Answer

A) $10,000. 
B) $3,750. 
C) $1,500. 
D) $20,000 
A) $10,000. 
B) $3,750. 
C) $1,500. 
D) $20,000

Question 7

If average cost is falling, then marginal cost must be less than average cost.

Accepted Answer

A) True 
 B)False

Question 8

If a firm finds itself at an output level where MR < MC, then the firm

Accepted Answer

A) should shut down, since it is losing money. 
B) should decrease output. 
C) should increase output. 
D) should raise the price of its product. 
A) should shut down, since it is losing money. 
B) should decrease output. 
C) should increase output. 
D) should raise the price of its product.

Question 9

Economic profit is always positive when

Accepted Answer

A) accounting profit is positive. 
B) accounting profit is zero. 
C) accounting profit is greater than the firm's opportunity costs. 
D) accounting profit is less than the firm's opportunity costs. 
A) accounting profit is positive. 
B) accounting profit is zero. 
C) accounting profit is greater than the firm's opportunity costs. 
D) accounting profit is less than the firm's opportunity costs.

Question 10

If your cumulative Grade Point Average (GPA) after two years of college is 3.0, and your grades for the current semester average 3.5, what will happen to your cumulative GPA? Explain the similarity of this example to the case of marginal cost and average cost.

Accepted Answer

If the current semester's GPA is above t

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

To find a firm's total revenue at every quantity, all you need to know is

Accepted Answer

A) the demand curve for its product. 
B) the demand curve for its product and its total cost. 
C) its profit-maximizing price and quantity. 
D) its total profit curve. 
A) the demand curve for its product. 
B) the demand curve for its product and its total cost. 
C) its profit-maximizing price and quantity. 
D) its total profit curve.

Question 13

Marginal profit is the additional profit that accrues to the firm when the output rises by one unit.

Accepted Answer

A) True 
 B)False

Question 14

Average revenue is equal to

Accepted Answer

A) TR/Q. 
B) (P × Q)/P. 
C) TR × Q. 
D) All of the responses are correct. 
A) TR/Q. 
B) (P × Q)/P. 
C) TR × Q. 
D) All of the responses are correct.

Question 15

The total cost curve generally has

Accepted Answer

A) slope values that first decrease and then increase rapidly. 
B) slope values that first increase rapidly and then decrease. 
C) increasing slope values. 
D) decreasing slope values. 
A) slope values that first decrease and then increase rapidly. 
B) slope values that first increase rapidly and then decrease. 
C) increasing slope values. 
D) decreasing slope values.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Total profit is maximized when marginal profit maximized.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) chooses both price and quantity, since it understands its demand relationship. 
B) cannot set price or quantity; this is done by the market. 
C) makes two separate decisions about quantity and product price. 
D) can set price but quantity is determined by market demand. 
A) chooses both price and quantity, since it understands its demand relationship. 
B) cannot set price or quantity; this is done by the market. 
C) makes two separate decisions about quantity and product price. 
D) can set price but quantity is determined by market demand.

Question 19

Management gets two numbers (price and quantity) from one decision because

Accepted Answer

A) the marginal utility of goods is fixed. 
B) producers use both technical and financial information. 
C) the demand curve consists of price and quantity pairs. 
D) the average cost curve has only one low point. 
A) the marginal utility of goods is fixed. 
B) producers use both technical and financial information. 
C) the demand curve consists of price and quantity pairs. 
D) the average cost curve has only one low point.

Question 20

Marginal revenue is the addition to total revenue resulting from the addition of one unit to total output.

Accepted Answer

A) True 
 B)False

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

Total revenue

"As long as total revenue slopes up, marginal revenue must slope up also." Explain whether this statement is true or false.

Economists assume that business firms have many goals, and profit maximization is just one of them.

If marginal profit is negative when the firm produces one more unit, then the firm is currently maximizing profits.

What rule(s) should a firm follow in deciding optimum output for profit maximization?

A firm is producing 2,500 units at its optimal output, with average variable cost per unit of $4 and average fixed cost per unit of $2.50.If sells its output at $8 per unit, total profit is

If average cost is falling, then marginal cost must be less than average cost.

If a firm finds itself at an output level where MR < MC, then the firm

Economic profit is always positive when

If your cumulative Grade Point Average (GPA) after two years of college is 3.0, and your grades for the current semester average 3.5, what will happen to your cumulative GPA? Explain the similarity of this example to the case of marginal cost and average cost.

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

To find a firm's total revenue at every quantity, all you need to know is

Marginal profit is the additional profit that accrues to the firm when the output rises by one unit.

Average revenue is equal to

The total cost curve generally has

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

Total profit is maximized when marginal profit maximized.

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

Management gets two numbers (price and quantity) from one decision because

Marginal revenue is the addition to total revenue resulting from the addition of one unit to total output.

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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