Question 1

Total profit equals

Accepted Answer

A) TR − TC. 
B) average profit times total output. 
C) total sales revenue minus total cost. 
D) All of the responses are correct. 
A) TR − TC. 
B) average profit times total output. 
C) total sales revenue minus total cost. 
D) All of the responses are correct.

Question 2

Economic profit of a decision in question equals

Accepted Answer

A) accounting profit of the decision in question + its opportunity cost. 
B) accounting profit of the decision in question − accounting profit of the best available alternative. 
C) accounting profit of the decision in question + its opportunity cost + overheads. 
D) its opportunity cost + accounting profit of the best available alternative. 
A) accounting profit of the decision in question + its opportunity cost. 
B) accounting profit of the decision in question − accounting profit of the best available alternative. 
C) accounting profit of the decision in question + its opportunity cost + overheads. 
D) its opportunity cost + accounting profit of the best available alternative.

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

The typical total profit graphical presentation is shown as

Accepted Answer

A) a square. 
B) a rectangle. 
C) a hill, or mound. 
D) an S curve. 
A) a square. 
B) a rectangle. 
C) a hill, or mound. 
D) an S curve.

Question 5

Marginal cost is defined by the slope of the total revenue curve.

Accepted Answer

A) True 
 B)False

Question 6

A profit-maximizing firm always

Accepted Answer

A) sells its output at P = MR. 
B) produces at the output at which MR = 0. 
C) hires labor until the MRP of labor = 0. 
D) produces every unit of output for which MR > MC. 
A) sells its output at P = MR. 
B) produces at the output at which MR = 0. 
C) hires labor until the MRP of labor = 0. 
D) produces every unit of output for which MR > MC.

Question 7

If a firm's average cost is currently $150, and the marginal cost is $195, then the average cost is rising.

Accepted Answer

A) True 
 B)False

Question 8

Total profit is maximized when marginal profit maximized.

Accepted Answer

A) True 
 B)False

Question 9

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 10

Given total cost and the quantity of output, marginal cost and average cost can be determined.

Accepted Answer

A) True 
 B)False

Question 11

A company draws its total cost curve and total revenue curve on the same graph. If the firm wishes to maximize profits, it will select the output at which the

Accepted Answer

A) vertical distance between the two curves is greatest. 
B) total cost curve cuts the total revenue curve. 
C) horizontal distance between the two curves is greatest. 
D) slope of the total revenue curve is greatest. 
A) vertical distance between the two curves is greatest. 
B) total cost curve cuts the total revenue curve. 
C) horizontal distance between the two curves is greatest. 
D) slope of the total revenue curve is greatest.

Question 12

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

Accepted Answer

​ 
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The profit-maximizing output is Q

Question 13

Accounting profit is usually smaller than economic profit.

Accepted Answer

A) True 
 B)False

Question 14

Over the range of most of a firm's output, average revenue is greater than price.

Accepted Answer

A) True 
 B)False

Total profit equals

Economic profit of a decision in question equals

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?

The typical total profit graphical presentation is shown as

Marginal cost is defined by the slope of the total revenue curve.

A profit-maximizing firm always

If a firm's average cost is currently $150, and the marginal cost is $195, then the average cost is rising.

Total profit is maximized when marginal profit maximized.

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

Given total cost and the quantity of output, marginal cost and average cost can be determined.

A company draws its total cost curve and total revenue curve on the same graph. If the firm wishes to maximize profits, it will select the output at which the

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

Accounting profit is usually smaller than economic profit.

Over the range of most of a firm's output, average revenue is greater than price.

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

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

Total profit equals

Economic profit of a decision in question equals

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?

The typical total profit graphical presentation is shown as

Marginal cost is defined by the slope of the total revenue curve.

A profit-maximizing firm always

If a firm's average cost is currently $150, and the marginal cost is $195, then the average cost is rising.

Total profit is maximized when marginal profit maximized.

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

Given total cost and the quantity of output, marginal cost and average cost can be determined.

A company draws its total cost curve and total revenue curve on the same graph. If the firm wishes to maximize profits, it will select the output at which the

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

Accounting profit is usually smaller than economic profit.

Over the range of most of a firm's output, average revenue is greater than price.

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