Question 1

Marginal profit equals the difference between marginal revenue and marginal cost.

Accepted Answer

A) True 
 B)False

Question 2

Michael Jordan averaged 35 points per game over a 100-game season.During the playoff round of 10 games, he averaged 50 points, and in the five-game championship series, he led the Chicago Bulls to victory, averaging 40 points.For the entire season, how many points did Jordan score, what was his average, and did the championship series pull his previous average up or down?

Accepted Answer

Over the regular season, Jordan scored 3

Question 3

According to the text, when management selects a price or quantity, it also selects the other.Explain why this is true.

Accepted Answer

The firm's demand curve determ

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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 7

The federal government, in order to fund expanded health care, imposes a lump-sum tax on all business property.Profit-maximizing firms that stay in business will respond by

Accepted Answer

A) raising prices to pay the tax. 
B) cutting output to reduce costs. 
C) lowering prices to stimulate demand. 
D) doing nothing. 
A) raising prices to pay the tax. 
B) cutting output to reduce costs. 
C) lowering prices to stimulate demand. 
D) doing nothing.

Question 8

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

Question 9

Total profit = Total revenue − Total cost (including opportunity cost).?
?
Total profit defined in this way is called

Accepted Answer

A) accounting profit. 
B) economic profit. 
C) absolute profit. 
D) relative profit. 
A) accounting profit. 
B) economic profit. 
C) absolute profit. 
D) relative profit.

Question 10

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 11

An optimal level of output is one at which marginal profit > 0.

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

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 14

Total profit is maximized

Accepted Answer

A) where the difference between total revenue and total cost is greatest. 
B) at that output level where marginal revenue equals average cost. 
C) where total revenue is at a maximum. 
D) at the point where all variable costs are covered. 
A) where the difference between total revenue and total cost is greatest. 
B) at that output level where marginal revenue equals average cost. 
C) where total revenue is at a maximum. 
D) at the point where all variable costs are covered.

Question 15

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 16

Average cost equals

Accepted Answer

A) change in total cost/change in quantity. 
B) total cost/quantity. 
C) total cost − total variable cost. 
D) total cost − total fixed cost. 
A) change in total cost/change in quantity. 
B) total cost/quantity. 
C) total cost − total variable cost. 
D) total cost − total fixed cost.

Question 17

At a profit-maximizing output level,

Accepted Answer

A) marginal revenue minus marginal cost equals zero. 
B) marginal profit equals zero. 
C) the slope of the total profit curve is zero. 
D) All of the above are true. 
A) marginal revenue minus marginal cost equals zero. 
B) marginal profit equals zero. 
C) the slope of the total profit curve is zero. 
D) All of the above are true.

Question 18

Marginal cost

Accepted Answer

A) equals the slope of the total cost curve. 
B) is calculated as DTC/DQ. 
C) is the increase in total cost resulting from a one-unit increase in output. 
D) All of the above are correct. 
A) equals the slope of the total cost curve. 
B) is calculated as DTC/DQ. 
C) is the increase in total cost resulting from a one-unit increase in output. 
D) All of the above are correct.

Question 19

Economists and accountants use the same definition of profit.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) marginal profit will be zero. 
B) marginal profit will be negative. 
C) marginal profit will be positive. 
D) MR > MC. 
A) marginal profit will be zero. 
B) marginal profit will be negative. 
C) marginal profit will be positive. 
D) MR > MC.

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

Marginal profit equals the difference between marginal revenue and marginal cost.

According to the text, when management selects a price or quantity, it also selects the other.Explain why this is true.

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

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

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.

The federal government, in order to fund expanded health care, imposes a lump-sum tax on all business property.Profit-maximizing firms that stay in business will respond by

Total profit equals

Total profit = Total revenue − Total cost (including opportunity cost).? ? Total profit defined in this way is called

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

An optimal level of output is one at which marginal profit > 0.

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

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

Total profit is maximized

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.

Average cost equals

At a profit-maximizing output level,

Marginal cost

Economists and accountants use the same definition of profit.

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

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

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

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

He 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

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