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. A

Question 2

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  True

Question 3

Figure 8-1
  
-Which graph in Figure 8-1 shows a typical firm's total revenue and total cost curves?

Accepted Answer

A) (a) 
B) (b) 
C) (c) 
D) (d) 
A) (a) 
B) (b) 
C) (c) 
D) (d) C

Question 4

Average cost can be thought of as the cost per unit.

Accepted Answer

A) True 
 B)False

Question 5

A firm's total revenue is simply the price of its product multiplied by the quantity sold.

Accepted Answer

A) True 
 B)False

Question 6

If a firm's marginal profit is negative,it should reduce its output level.

Accepted Answer

A) True 
 B)False

Question 7

Whenever average cost exceeds marginal cost,

Accepted Answer

A) average cost is rising. 
B) average cost is falling. 
C) marginal cost is rising. 
D) marginal cost is falling. 
A) average cost is rising. 
B) average cost is falling. 
C) marginal cost is rising. 
D) marginal cost is falling.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 10

A firm that decides to make a price cut assumes that marginal profit is negative.

Accepted Answer

A) True 
 B)False

Question 11

In reality,decisions made by firms may not always produce maximum total profit because some executives

Accepted Answer

A) are more motivated by altruism. 
B) are more interested in market share than profits. 
C) may push research and development to the point that profits decline. 
D) All of the above are correct. 
A) are more motivated by altruism. 
B) are more interested in market share than profits. 
C) may push research and development to the point that profits decline. 
D) All of the above are correct.

Question 12

The demand curve facing Company ABC is perfectly elastic.What is its marginal revenue?

Accepted Answer

A) Equal to the average revenue. 
B) Less than the price. 
C) Higher than the price. 
D) Higher than the average revenue. 
A) Equal to the average revenue. 
B) Less than the price. 
C) Higher than the price. 
D) Higher than the average revenue.

Question 13

Total revenue

Accepted Answer

A) can be calculated directly from the demand curve. 
B) can be calculated directly from the average revenue curve. 
C) is found by multiplying price times quantity. 
D) All of the above are correct. 
A) can be calculated directly from the demand curve. 
B) can be calculated directly from the average revenue curve. 
C) is found by multiplying price times quantity. 
D) All of the above are correct.

Question 14

Marginal profit is the slope of the total profit curve.

Accepted Answer

A) True 
 B)False

Question 15

Sally leaves her $24,000 secretarial position with a company and invests her savings of $15,000 (on which she was earning 6 percent interest)in her own Ready Sec agency.After expenses,her net income was $28,900.Her economic profit was

Accepted Answer

A) $4,900. 
B) $4,000. 
C) $28,900. 
D) -$10,100. 
A) $4,900. 
B) $4,000. 
C) $28,900. 
D) -$10,100.

Question 16

Total profit is maximized where

Accepted Answer

A) MR = MC. 
B) marginal profit is zero. 
C) the slope of the marginal profit curve is zero. 
D) All of the above are correct. 
A) MR = MC. 
B) marginal profit is zero. 
C) the slope of the marginal profit curve is zero. 
D) All of the above are correct.

Question 17

If the marginal profit of the next unit is negative,the firm should produce more output in order to generate greater profit.

Accepted Answer

A) True 
 B)False

Question 18

What is the value of marginal profit at the profit-maximizing output?

Accepted Answer

Marginal profit is the difference betwee

Question 19

Total cost equals average cost multiplied by the quantity of output.

Accepted Answer

A) True 
 B)False

Question 20

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.

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

For any firm,price always equals

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.

Figure 8-1 -Which graph in Figure 8-1 shows a typical firm's total revenue and total cost curves?

Average cost can be thought of as the cost per unit.

A firm's total revenue is simply the price of its product multiplied by the quantity sold.

If a firm's marginal profit is negative,it should reduce its output level.

Whenever average cost exceeds marginal cost,

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

Decision making that seeks only solutions that are acceptable is called

A firm that decides to make a price cut assumes that marginal profit is negative.

In reality,decisions made by firms may not always produce maximum total profit because some executives

The demand curve facing Company ABC is perfectly elastic.What is its marginal revenue?

Total revenue

Marginal profit is the slope of the total profit curve.

Sally leaves her $24,000 secretarial position with a company and invests her savings of $15,000 (on which she was earning 6 percent interest)in her own Ready Sec agency.After expenses,her net income was $28,900.Her economic profit was

Total profit is maximized where

If the marginal profit of the next unit is negative,the firm should produce more output in order to generate greater profit.

What is the value of marginal profit at the profit-maximizing output?

Total cost equals average cost multiplied by the quantity of output.

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 I: the Price System

The Shortcomings of Free Markets

The Markets Prime Achievement: Innovation and Growth

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

International Trade and Comparative Advantage

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