Question 1

According to the text, on a kibbutz in Israel

Accepted Answer

A)  farmers produce oranges no matter what the price 
B)  members are not profit maximizers 
C)  there is no link between an individual's effort and reward 
D)  universal equality is seen as unrealistic 
E)  high-tech manufacturing is not feasible 
A)  farmers produce oranges no matter what the price 
B)  members are not profit maximizers 
C)  there is no link between an individual's effort and reward 
D)  universal equality is seen as unrealistic 
E)  high-tech manufacturing is not feasible

Question 2

In the short run, which factor is not relevant in profit-maximizing output decisions?

Accepted Answer

A)  wage rates 
B)  raw material costs 
C)  mortgage costs 
D)  energy costs 
E)  market price 
A)  wage rates 
B)  raw material costs 
C)  mortgage costs 
D)  energy costs 
E)  market price

Question 3

The marginal cost of catching a fish is the same as the average total cost at your currentlevel of 3,000 fish. If the price you receive for fish is greater than the marginal cost of the3,000th fish, you should

Accepted Answer

A)  add another boat to your fleet 
B)  decrease production until MC = MR 
C)  increase production until MC = MR 
D)  stop production at 3,000th fish 
E)  decrease production until the marginal cost of the next unit is enough to pay for the workers, bait, and fuel 
A)  add another boat to your fleet 
B)  decrease production until MC = MR 
C)  increase production until MC = MR 
D)  stop production at 3,000th fish 
E)  decrease production until the marginal cost of the next unit is enough to pay for the workers, bait, and fuel

Question 4

The Marshall Kiwanis Club noticed the organizer of their bratwurst booth, at the Celebrate Marshall Festival, seemed more interested in the size and flair of their booth than the cost of achieving it. This excessive interest in prestige of the booth rather than profits made for charity is an example of stakeholder rights.

Accepted Answer

A) True 
 B)False

Question 5

If you know what marginal cost is, then you should know what marginal revenue is. It's the change in

Accepted Answer

A)  total profit generated by a change in quantity 
B)  price generated by a change in quantity 
C)  total revenue generated by a change in quantity 
D)  output generated by a $1 change in price 
E)  average revenue generated by a change in quantity 
A)  total profit generated by a change in quantity 
B)  price generated by a change in quantity 
C)  total revenue generated by a change in quantity 
D)  output generated by a $1 change in price 
E)  average revenue generated by a change in quantity

Question 6

Suppose a fishing boat currently brings 10,000 fish to market each day and earns a profitof $40,000 when the price of fish is $12. Suppose that there are 100 workers on the boat, and each works 10 hours each day. If their health insurance premiums, paid by the boat owner, increase by $80 per worker, what will the new profit be?

Accepted Answer

A)  $80,000 
B)  a loss of $40,000 
C)  $48,000 
D)  $32,000 
E)  a loss of $760,000 
A)  $80,000 
B)  a loss of $40,000 
C)  $48,000 
D)  $32,000 
E)  a loss of $760,000

Question 7

The controversy about whether entrepreneurs should be judged according to what they do or say originated between

Accepted Answer

A)  Friedman and Hopkins 
B)  Berle and Means 
C)  Lester and Machlup 
D)  Baumol and Galbraith 
E)  Smith and Thurow 
A)  Friedman and Hopkins 
B)  Berle and Means 
C)  Lester and Machlup 
D)  Baumol and Galbraith 
E)  Smith and Thurow

Question 8

Technically speaking, if price > AVC, then

Accepted Answer

A)  TR > TC 
B)  profit is positive 
C)  TR > TVC 
D)  profit is negative 
E)  the firm should shut down 
A)  TR > TC 
B)  profit is positive 
C)  TR > TVC 
D)  profit is negative 
E)  the firm should shut down

Question 9

If marginal cost equals marginal revenue on the downward-sloping segment of the marginal cost curve, then increasing production until marginal cost again equals marginal revenue, this time on the upward-sloping segment of the marginal cost curve, is a profit-maximizing decision.

Accepted Answer

A) True 
 B)False

Question 10

Robert produces sunglasses. He can sell them for $15 per pair. At the level of output where MR = MC, hisAVC = $15.45 and his AFC = $.40. Explain whether or not Robert should shut down.

Accepted Answer

Robert should shut down because he canno

Question 11

When we see a firm make a long-run decision to exit the industry, it is likely that

Accepted Answer

A)  profits are positive but unattractive to the owner 
B)  market prices only covered average total, but not average variable costs 
C)  all loans have been paid back early 
D)  market prices will stay below marginal costs at all levels of production where average total costs are falling 
E)  the cost of fixed factors of production have increased dramatically 
A)  profits are positive but unattractive to the owner 
B)  market prices only covered average total, but not average variable costs 
C)  all loans have been paid back early 
D)  market prices will stay below marginal costs at all levels of production where average total costs are falling 
E)  the cost of fixed factors of production have increased dramatically

Question 12

There are situations in which average revenue and price are different.

Accepted Answer

A) True 
 B)False

Question 13

ATC always exceeds AVC.

Accepted Answer

A) True 
 B)False

Question 14

If SnuggleTight, a pillow-making firm in Long Island, NY, incurs losses by producing where its MR = MC, then at least in the short run, it should

Accepted Answer

A)  shut down 
B)  increase output 
C)  decrease output 
D)  remain at that output level only if P > AVC 
E)  remain at that output level only if P > ATC 
A)  shut down 
B)  increase output 
C)  decrease output 
D)  remain at that output level only if P > AVC 
E)  remain at that output level only if P > ATC

Question 15

If a firm faces a price of $12 regardless of how many units it produces and the marginal cost is constant at $10 regardless of how many units it produces, then theoretically, the firm should never stop producing.

Accepted Answer

A) True 
 B)False

Question 16

It's logical, it's a rule of thumb, it's an economic guideline: As long as MR < MC, and the firm responds by decreasing the quantity it produces,

Accepted Answer

A)  profit will equal zero 
B)  profit will increase 
C)  profit will decrease 
D)  profit will remain unchanged 
E)  the firm will minimize loss 
A)  profit will equal zero 
B)  profit will increase 
C)  profit will decrease 
D)  profit will remain unchanged 
E)  the firm will minimize loss

Question 17

A firm will never operate at a loss.

Accepted Answer

A) True 
 B)False

Question 18

The MR = MC rule is no longer accepted by most economists as representing the behavior of firms.

Accepted Answer

A) True 
 B)False

Question 19

Suppose two fishing boats are both run by profit-maximizing captains. Bob's boat costhim $500,000 and Debra's boat cost her $400,000. If they both have identical boats and their labor and fuel costs are the same, who will catch more fish?

Accepted Answer

A)  Bob will catch 20 percent fewer fish 
B)  Debra will catch 20 percent fewer fish 
C)  they will catch the same 
D)  Bob will catch 25 percent more fish 
E)  Debra will catch 25 percent more fish 
A)  Bob will catch 20 percent fewer fish 
B)  Debra will catch 20 percent fewer fish 
C)  they will catch the same 
D)  Bob will catch 25 percent more fish 
E)  Debra will catch 25 percent more fish

Question 20

Suppose you're producing designer clothes for Barbie dolls. You're producing 100 units and discover that the MR for the 100th unit is $50 while the MC of the 100th unit is $45. If you're in the short run, it's a signal for you to

Accepted Answer

A)  shut down 
B)  stay where you are because you're making profit on that unit 
C)  increase production beyond 100 units 
D)  produce less than 100 units 
E)  it's no signal because price data is unknown 
A)  shut down 
B)  stay where you are because you're making profit on that unit 
C)  increase production beyond 100 units 
D)  produce less than 100 units 
E)  it's no signal because price data is unknown

According to the text, on a kibbutz in Israel

In the short run, which factor is not relevant in profit-maximizing output decisions?

The marginal cost of catching a fish is the same as the average total cost at your currentlevel of 3,000 fish. If the price you receive for fish is greater than the marginal cost of the3,000th fish, you should

If you know what marginal cost is, then you should know what marginal revenue is. It's the change in

The controversy about whether entrepreneurs should be judged according to what they do or say originated between

Technically speaking, if price > AVC, then

If marginal cost equals marginal revenue on the downward-sloping segment of the marginal cost curve, then increasing production until marginal cost again equals marginal revenue, this time on the upward-sloping segment of the marginal cost curve, is a profit-maximizing decision.

Robert produces sunglasses. He can sell them for $15 per pair. At the level of output where MR = MC, hisAVC = $15.45 and his AFC = $.40. Explain whether or not Robert should shut down.

When we see a firm make a long-run decision to exit the industry, it is likely that

There are situations in which average revenue and price are different.

ATC always exceeds AVC.

If SnuggleTight, a pillow-making firm in Long Island, NY, incurs losses by producing where its MR = MC, then at least in the short run, it should

If a firm faces a price of $12 regardless of how many units it produces and the marginal cost is constant at $10 regardless of how many units it produces, then theoretically, the firm should never stop producing.

It's logical, it's a rule of thumb, it's an economic guideline: As long as MR < MC, and the firm responds by decreasing the quantity it produces,

A firm will never operate at a loss.

The MR = MC rule is no longer accepted by most economists as representing the behavior of firms.

Suppose two fishing boats are both run by profit-maximizing captains. Bob's boat costhim $500,000 and Debra's boat cost her $400,000. If they both have identical boats and their labor and fuel costs are the same, who will catch more fish?

Suppose you're producing designer clothes for Barbie dolls. You're producing 100 units and discover that the MR for the 100th unit is $50 while the MC of the 100th unit is $45. If you're in the short run, it's a signal for you to

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters

Exam 9: Maximizing Profit

According to the text, on a kibbutz in Israel

In the short run, which factor is not relevant in profit-maximizing output decisions?

The marginal cost of catching a fish is the same as the average total cost at your currentlevel of 3,000 fish. If the price you receive for fish is greater than the marginal cost of the3,000th fish, you should

If you know what marginal cost is, then you should know what marginal revenue is. It's the change in

The controversy about whether entrepreneurs should be judged according to what they do or say originated between

Technically speaking, if price > AVC, then

If marginal cost equals marginal revenue on the downward-sloping segment of the marginal cost curve, then increasing production until marginal cost again equals marginal revenue, this time on the upward-sloping segment of the marginal cost curve, is a profit-maximizing decision.

Robert produces sunglasses. He can sell them for $15 per pair. At the level of output where MR = MC, hisAVC = $15.45 and his AFC = $.40. Explain whether or not Robert should shut down.

When we see a firm make a long-run decision to exit the industry, it is likely that

There are situations in which average revenue and price are different.

ATC always exceeds AVC.

If SnuggleTight, a pillow-making firm in Long Island, NY, incurs losses by producing where its MR = MC, then at least in the short run, it should

If a firm faces a price of $12 regardless of how many units it produces and the marginal cost is constant at $10 regardless of how many units it produces, then theoretically, the firm should never stop producing.

It's logical, it's a rule of thumb, it's an economic guideline: As long as MR < MC, and the firm responds by decreasing the quantity it produces,

A firm will never operate at a loss.

The MR = MC rule is no longer accepted by most economists as representing the behavior of firms.

Suppose two fishing boats are both run by profit-maximizing captains. Bob's boat costhim $500,000 and Debra's boat cost her $400,000. If they both have identical boats and their labor and fuel costs are the same, who will catch more fish?

Suppose you're producing designer clothes for Barbie dolls. You're producing 100 units and discover that the MR for the 100th unit is $50 while the MC of the 100th unit is $45. If you're in the short run, it's a signal for you to

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters