Question 1

Marginal revenue is the addition to a firm's revenue from

Accepted Answer

A) a $1 change in price. 
B) a one-unit change in output. 
C) the sale of inferior output. 
D) a $1 reduction in marginal cost. 
A) a $1 change in price. 
B) a one-unit change in output. 
C) the sale of inferior output. 
D) a $1 reduction in marginal cost.

Question 2

If a firm's average cost is currently $100, and the marginal cost is $95, then the average cost is currently falling.

Accepted Answer

A) True 
 B)False

Question 3

The firm described in Table 8-1 has a fixed cost of ____ at its optimal level of output.

Accepted Answer

A) 2 
B) 6 
C) 10 
D) 26 
A) 2 
B) 6 
C) 10 
D) 26

Question 4

Total profit is maximized if the slope of the total profit curve is

Accepted Answer

A) positive. 
B) negative. 
C) increasing. 
D) zero. 
A) positive. 
B) negative. 
C) increasing. 
D) zero.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Why is the total profit curve shaped like a hill?

Accepted Answer

If a firm produces nothing, it certainly

Question 7

A firm has positive fixed cost and positive variable cost. At its current level of output, marginal cost equals average cost. The firm must

Accepted Answer

A) not be producing at its profit-maximizing level of output. 
B) be producing the quantity that minimizes average cost. 
C) be operating at a point at which total variable cost equals total fixed cost. 
D) be earning negative profit. 
A) not be producing at its profit-maximizing level of output. 
B) be producing the quantity that minimizes average cost. 
C) be operating at a point at which total variable cost equals total fixed cost. 
D) be earning negative profit.

Question 8

Total profit is represented by the vertical distance between a total revenue curve and a total cost curve.

Accepted Answer

A) True 
 B)False

Question 9

Virtually all firms expend resources to do precise calculations of marginal cost and marginal revenue for decision making.

Accepted Answer

A) True 
 B)False

Question 10

Do firms really seek to maximize profits?

Accepted Answer

Profit maximization is difficult because

Question 11

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 12

All business firms should consider their fixed costs in determining the prices they set.

Accepted Answer

A) True 
 B)False

Question 13

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 14

If fixed cost rises,

Accepted Answer

A) the profit-maximizing level of output would decrease. 
B) the profit-maximizing level of output would not change. 
C) marginal cost rises. 
D) variable cost falls. 
A) the profit-maximizing level of output would decrease. 
B) the profit-maximizing level of output would not change. 
C) marginal cost rises. 
D) variable cost falls.

Question 15

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 16

In Table 8-2, the profit-maximizing level of output is

Accepted Answer

A) 6 
B) 10 
C) 16 
D) 21 
A) 6 
B) 10 
C) 16 
D) 21

Question 17

A firm's price is

Accepted Answer

A) greater than average revenue. 
B) greater than marginal revenue. 
C) less than marginal cost. 
D) equal to average revenue. 
A) greater than average revenue. 
B) greater than marginal revenue. 
C) less than marginal cost. 
D) equal to average revenue.

Question 18

Profit can be maximized only where marginal revenue equals

Accepted Answer

A) average cost. 
B) total cost. 
C) marginal cost. 
A) average cost. 
B) total cost. 
C) marginal cost.

Question 19

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 20

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.

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

Marginal revenue is the addition to a firm's revenue from

If a firm's average cost is currently $100, and the marginal cost is $95, then the average cost is currently falling.

The firm described in Table 8-1 has a fixed cost of ____ at its optimal level of output.

Total profit is maximized if the slope of the total profit curve is

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

Why is the total profit curve shaped like a hill?

A firm has positive fixed cost and positive variable cost. At its current level of output, marginal cost equals average cost. The firm must

Total profit is represented by the vertical distance between a total revenue curve and a total cost curve.

Virtually all firms expend resources to do precise calculations of marginal cost and marginal revenue for decision making.

Do firms really seek to maximize profits?

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

All business firms should consider their fixed costs in determining the prices they set.

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

If fixed cost rises,

Decision making that seeks only solutions that are acceptable is called

In Table 8-2, the profit-maximizing level of output is

A firm's price is

Profit can be maximized only where marginal revenue equals

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?

A firm can use its demand curve to calculate

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

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

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

Filters