Question 1

At the current level of production,if the firm's marginal costs exceeds marginal benefits,then

Accepted Answer

A) The company should produce more 
B) The company is maximizing profit at this output 
C) The company is producing too much 
D) Not possible to determine 
A) The company should produce more 
B) The company is maximizing profit at this output 
C) The company is producing too much 
D) Not possible to determine C

Question 2

Use the following table to answer questions 38 - 41:
  
-What is the marginal revenue of producing the fourth unit?

Accepted Answer

A) 90 
B) 40 
C) 20 
D) 180 
A) 90 
B) 40 
C) 20 
D) 180 B

Question 3

A firm is thinking of hiring an additional worker to their organization who they believe can increase total productivity by 100 units a week.The cost of hiring him or her is $1500 per week.If the price of each unit is $12,

Accepted Answer

A) the MR of hiring the worker is $1500 
B) The MC of hiring the worker is $1200 
C) The firm should not hire the worker since MB<MC 
D) All the above 
A) the MR of hiring the worker is $1500 
B) The MC of hiring the worker is $1200 
C) The firm should not hire the worker since MB<MC 
D) All the above C

Question 4

Which of the following is an incorrect statement?

Accepted Answer

A) If for an activity MR>MC,then do more of it 
B) An incentive compensation scheme that increases MR will increase effort 
C) Fixed fees have no effect on effort 
D) Average cost is relevant to an extent decision 
A) If for an activity MR>MC,then do more of it 
B) An incentive compensation scheme that increases MR will increase effort 
C) Fixed fees have no effect on effort 
D) Average cost is relevant to an extent decision

Question 5

The optimal amount of studying for the next exam is determined by comparing

Accepted Answer

A) total benefit and the total cost of studying. 
B) marginal benefit and the total cost of studying. 
C) marginal benefit and the marginal cost of studying. 
A) total benefit and the total cost of studying. 
B) marginal benefit and the total cost of studying. 
C) marginal benefit and the marginal cost of studying.

Question 6

If a firm produces 10 units,TC=$100.When the firm increase its output to 15 units,TC= $150.The firm's variable costs equal to

Accepted Answer

A) $25 
B) $0 
C) $50 
D) $100 
A) $25 
B) $0 
C) $50 
D) $100

Question 7

Total cost divided by the total number of inputs is called:

Accepted Answer

A) marginal cost 
B) average cost 
C) total cost 
D) variable cost 
A) marginal cost 
B) average cost 
C) total cost 
D) variable cost

Question 8

Use the following to answer questions 4-8:
  
-The marginal cost of hiring the 7th worker is

Accepted Answer

A) $400 
B) $1000 
C) $200 
D) $0 
A) $400 
B) $1000 
C) $200 
D) $0

Question 9

Use the following to answer questions 11-16:
  
-If the firms hires 5 workers,the average variable costs equals

Accepted Answer

A) $200 
B) $50 
C) $80 
D) $40 
A) $200 
B) $50 
C) $80 
D) $40

Question 10

Use the following to answer questions 4-8:
  
-If the firms hires 5 workers,the average variable costs equals

Accepted Answer

A) $10 
B) $100 
C) $800 
D) Need more information 
A) $10 
B) $100 
C) $800 
D) Need more information

Question 11

A manager of a clothing firm is deciding whether to add another factory in addition to one already in production.The manager would compare

Accepted Answer

A) The total benefits gained from the two factories to the total costs of running the two factories. 
B) The incremental benefit expected from the second factory to the total costs of running the two factories. 
C) The incremental benefit expected from the second factory to the cost of the second factory 
D) The total benefits gained from the two factories to the incremental costs of running the two factories. 
A) The total benefits gained from the two factories to the total costs of running the two factories. 
B) The incremental benefit expected from the second factory to the total costs of running the two factories. 
C) The incremental benefit expected from the second factory to the cost of the second factory 
D) The total benefits gained from the two factories to the incremental costs of running the two factories.

Question 12

Use the following table to answer questions 38 - 41:
  
-What is the level of profits when four units are produced?

Accepted Answer

A) 40. 
B) 70. 
C) -30. 
D) 20. 
A) 40. 
B) 70. 
C) -30. 
D) 20.

Question 13

What is the average cost per unit for producing 3 units?

Accepted Answer

A) 200 
B) 260 
C) 70 
D) 110. 
A) 200 
B) 260 
C) 70 
D) 110.

Question 14

Use the following to answer questions 11-16:
  
-The marginal cost of hiring the 4th worker is

Accepted Answer

A) $40 
B) $100 
C) $20 
D) $0 
A) $40 
B) $100 
C) $20 
D) $0

Question 15

When economists speak of "marginal",they mean

Accepted Answer

A) Opportunity 
B) Scarcity 
C) Incremental 
D) Unimportant 
A) Opportunity 
B) Scarcity 
C) Incremental 
D) Unimportant

Question 16

Which is not a fixed cost?

Accepted Answer

A) monthly rent of $1,000 with a 12 month lease 
B) an insurance premium of $50 per year,paid last month 
C) Tax accountant's salary 
D) labor costs paid per hour 
A) monthly rent of $1,000 with a 12 month lease 
B) an insurance premium of $50 per year,paid last month 
C) Tax accountant's salary 
D) labor costs paid per hour

Question 17

If you know that with 8 units of output,average fixed cost is $40 and average variable cost is $25,then total cost at this output level is:

Accepted Answer

A) $320 
B) $200 
C) $520 
D) $1000 
A) $320 
B) $200 
C) $520 
D) $1000

Question 18

Use the following to answer questions 11-16:
  
-If hiring the 7th worker increases total product by 5 units and the price of each unit is $2,

Accepted Answer

A) the firm should not hire the 7th worker as MBMC D) the firm should not hire the 7th worker as MBMC D) the firm should not hire the 7th worker as MB

Question 19

The level of an economic activity should be increased to the point where

Accepted Answer

A) Marginal benefits equal to zero 
B) Marginal costs of the investment are less than marginal benefits of the investment 
C) Marginal benefits are greater than marginal costs 
D) Marginal costs are equal to marginal benefits 
A) Marginal benefits equal to zero 
B) Marginal costs of the investment are less than marginal benefits of the investment 
C) Marginal benefits are greater than marginal costs 
D) Marginal costs are equal to marginal benefits

Question 20

Use the following to answer questions 11-16:
  
-If the firm hires 5 workers,the average cost equals

Accepted Answer

A) $250 
B) $50 
C) $5 
D) Need more information 
A) $250 
B) $50 
C) $5 
D) Need more information

Exam 4: Extent How Muchdecisions

At the current level of production,if the firm's marginal costs exceeds marginal benefits,then

Use the following table to answer questions 38 - 41: -What is the marginal revenue of producing the fourth unit?

A firm is thinking of hiring an additional worker to their organization who they believe can increase total productivity by 100 units a week.The cost of hiring him or her is $1500 per week.If the price of each unit is $12,

Which of the following is an incorrect statement?

The optimal amount of studying for the next exam is determined by comparing

If a firm produces 10 units,TC=$100.When the firm increase its output to 15 units,TC= $150.The firm's variable costs equal to

Total cost divided by the total number of inputs is called:

Use the following to answer questions 4-8: -The marginal cost of hiring the 7th worker is

Use the following to answer questions 11-16: -If the firms hires 5 workers,the average variable costs equals

Use the following to answer questions 4-8: -If the firms hires 5 workers,the average variable costs equals

A manager of a clothing firm is deciding whether to add another factory in addition to one already in production.The manager would compare

Use the following table to answer questions 38 - 41: -What is the level of profits when four units are produced?

What is the average cost per unit for producing 3 units?

Use the following to answer questions 11-16: -The marginal cost of hiring the 4th worker is

When economists speak of "marginal",they mean

Which is not a fixed cost?

If you know that with 8 units of output,average fixed cost is $40 and average variable cost is $25,then total cost at this output level is:

Use the following to answer questions 11-16: -If hiring the 7th worker increases total product by 5 units and the price of each unit is $2,

The level of an economic activity should be increased to the point where

Use the following to answer questions 11-16: -If the firm hires 5 workers,the average cost equals

The One Lessor of Business

Benefits, Costs, and Decisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long-Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination Indirect Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters