Question 1

For any firm, price always equals

Accepted Answer

A) average revenue. 
B) marginal revenue. 
C) marginal cost. 
D) marginal profit. 
A) average revenue. 
B) marginal revenue. 
C) marginal cost. 
D) marginal profit.

Question 2

Suppose that on a Saturday night at 10pm a large hotel has 300 vacant rooms, with little expectation of renting them at such a late hour on a weekend.A traveler comes in the door, looking a bit down on his luck, and asks how much a room will cost.Since he can't afford the normal rate of $150, the night manager decides to let him stay in the room for only $40.Is it likely that this decision reduced, or increased, the hotel's profits?
 Explain your answer.

Accepted Answer

Marginal analysis can help answer this q

Question 3

The demand curve facing a firm is also the firm's

Accepted Answer

A) total utility curve. 
B) average revenue curve. 
C) average utility curve. 
D) total revenue curve. 
A) total utility curve. 
B) average revenue curve. 
C) average utility curve. 
D) total revenue curve.

Question 4

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 5

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 6

Average revenue is equal to

Accepted Answer

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

Question 7

Price and output decisions are two aspects of the same choice.

Accepted Answer

A) True 
 B)False

Question 8

Profits will be maximized when the slope of the total revenue curve and the slope of the total cost curve equal zero.

Accepted Answer

A) True 
 B)False

Question 9

Total revenue is equal to quantity multiplied by average revenue.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Average cost

Accepted Answer

A) is always larger than marginal cost. 
B) declines for some range of output, hits a minimum, and then increases. 
C) is always smaller than marginal cost. 
D) is total cost/price of the product. 
A) is always larger than marginal cost. 
B) declines for some range of output, hits a minimum, and then increases. 
C) is always smaller than marginal cost. 
D) is total cost/price of the product.

Question 12

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 13

Some companies follow a strategy of sales maximization.They say that this puts them in close touch with their customers and they can better track the market, responding to needs more quickly.However, this increases costs because of the need to stock a wider variety of parts and sizes and colors, etc.What would make this strategy a profit-maximizing one?

Accepted Answer

The increase in reve

Question 14

If marginal cost is less than average cost, average cost must fall when more units are produced.

Accepted Answer

A) True 
 B)False

Question 15

Average cost is the cost of producing the next unit.

Accepted Answer

A) True 
 B)False

Question 16

It can be shown that average revenue and price are always equal.

Accepted Answer

A) True 
 B)False

Question 17

Figure 8-5
  
-In Figure 8-5, profits are maximized at output of

Accepted Answer

A) 10. 
B) 35. 
C) 50. 
D) 60. 
A) 10. 
B) 35. 
C) 50. 
D) 60.

Question 18

Why is the total profit curve shaped like a hill?

Accepted Answer

If a firm produces nothing, it certainly

Question 19

A graph of total profits is always likely to be positively sloped throughout its length.

Accepted Answer

A) True 
 B)False

Question 20

A small business owner who is earning a positive economic profit, no matter how small, is doing better than if she sold her business and went to work for another firm.

Accepted Answer

A) True 
 B)False

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

For any firm, price always equals

The demand curve facing a firm is also the firm's

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?

Decision making that seeks only solutions that are acceptable is called

Average revenue is equal to

Price and output decisions are two aspects of the same choice.

Profits will be maximized when the slope of the total revenue curve and the slope of the total cost curve equal zero.

Total revenue is equal to quantity multiplied by average revenue.

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

Average cost

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

If marginal cost is less than average cost, average cost must fall when more units are produced.

Average cost is the cost of producing the next unit.

It can be shown that average revenue and price are always equal.

Figure 8-5 -In Figure 8-5, profits are maximized at output of

Why is the total profit curve shaped like a hill?

A graph of total profits is always likely to be positively sloped throughout its length.

A small business owner who is earning a positive economic profit, no matter how small, is doing better than if she sold her business and went to work for another firm.

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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