Question 1

Suppose that a firm has to pay a 10% tax on revenue.The profit-maximizing level of output is ?

Accepted Answer

A) unaffected by the tax. 
B) increased because of the tax. 
C) decreased because of the tax. 
A) unaffected by the tax. 
B) increased because of the tax. 
C) decreased because of the tax. C

Question 2

If an unregulated electric company is a monopolist and faces demand of Q = 50 - 10P.It has a constant marginal cost of 1 and must pay an environmental fee to the government of 0.2 per unit of output.In this situation,the profit-maximizing level of output is:

Accepted Answer

A) 5 
B) 10 
C) 20 
D) 50 
A) 5 
B) 10 
C) 20 
D) 50 C

Question 3

If a firm is a price taker,its marginal revenue is

Accepted Answer

A) equal to market price. 
B) less than market price. 
C) greater than market price. 
D) a multiple of market price that may be either greater than or less than one. 
A) equal to market price. 
B) less than market price. 
C) greater than market price. 
D) a multiple of market price that may be either greater than or less than one. A

Question 4

Suppose that a firm has to pay a 10% tax on its total revenue.This has the effect of ?

Accepted Answer

A) flattening marginal cost. 
B) increasing marginal revenue. 
C) decreasing marginal cost. 
D) decreasing marginal revenue. 
A) flattening marginal cost. 
B) increasing marginal revenue. 
C) decreasing marginal cost. 
D) decreasing marginal revenue.

Question 5

A firm's marginal revenue is defined as

Accepted Answer

A) the ratio of total revenue to total quantity produced. 
B) the additional output produced by lowering price. 
C) the additional revenue received due to technical innovation. 
D) the additional revenue received when selling one more unit of output. 
A) the ratio of total revenue to total quantity produced. 
B) the additional output produced by lowering price. 
C) the additional revenue received due to technical innovation. 
D) the additional revenue received when selling one more unit of output.

Question 6

It is usually assumed that a perfectly competitive firm's supply curve is given by its marginal cost curve.In order for this to be true,which of the following additional assumptions are necessary? I.That the firm seek to maximize profits.
II.That the marginal cost curve be positively sloped.
III.That price exceeds average variable cost.
IV.That price exceeds average total cost.

Accepted Answer

A) All of the above. 
B) I and II but not III and IV. 
C) I and III but not II and IV. 
D) I and II only. 
E) I,II and III,but not IV. 
A) All of the above. 
B) I and II but not III and IV. 
C) I and III but not II and IV. 
D) I and II only. 
E) I,II and III,but not IV.

Question 7

In order to maximize profits,a firm should produce at the output level for which

Accepted Answer

A) average cost is minimized. 
B) marginal revenue equals marginal cost. 
C) marginal cost is minimized. 
D) price minus average cost is as large as possible. 
A) average cost is minimized. 
B) marginal revenue equals marginal cost. 
C) marginal cost is minimized. 
D) price minus average cost is as large as possible.

Question 8

If a firm wished to maximize total revenues it should produce where

Accepted Answer

A) marginal cost is zero. 
B) marginal revenue is zero. 
C) marginal revenue is equal to marginal cost. 
D) marginal revenue is equal to price. 
A) marginal cost is zero. 
B) marginal revenue is zero. 
C) marginal revenue is equal to marginal cost. 
D) marginal revenue is equal to price.

Question 9

Suppose a farmer is a price taker in soybeans with cost functions given by ? 
TC = .1q2 + 2q + 100
MC = .2q + 2
Suppose the farmer has to purchase a license for $50 per period in order to stay in business. In this case,its marginal cost function is

Accepted Answer

A) still MC = .2q + 2 
B) MC = .2q + 50 
C) MC = .2q + 52 
D) MC = 50 
A) still MC = .2q + 2 
B) MC = .2q + 50 
C) MC = .2q + 52 
D) MC = 50

Question 10

Suppose a farmer is a price taker for soybean sales with cost functions given by ? 
TC = .1q2 + 2q + 30
MC = .2q + 2
The profit maximizing level of output is

Accepted Answer

A) 0 
B) 30 
C) 40 
D) 50 
A) 0 
B) 30 
C) 40 
D) 50

Question 11

If an unregulated electric company is a monopolist,faces demand of Q = 100 - 50P,and has a constant marginal cost of 1,the profit-maximizing price is

Accepted Answer

A) 0 
B) 1 
C) 1.5 
D) 2 
A) 0 
B) 1 
C) 1.5 
D) 2

Question 12

Suppose a farmer is a price taker in soybeans with cost functions given by ? 
TC = .1q2 + 2q + 30
MC = .2q + 2
Suppose the farmer has to purchase a license for $50 per period in order to stay in business. In this case,its new total cost function is

Accepted Answer

A) still TC = .1q2 + 2 
B) TC = .1q2 + .2q + 80 
C) TC = .1q2 + 2q + 50 
D) TC = 50 
A) still TC = .1q2 + 2 
B) TC = .1q2 + .2q + 80 
C) TC = .1q2 + 2q + 50 
D) TC = 50

Question 13

If an unregulated electric company is a monopolist and faces demand of Q = 50 - 10P,its marginal revenue function is given by

Accepted Answer

A) $5 - \frac { 1 } { 10 } Q$ 
B)  $1 - \frac { 1 } { 10 } Q$ 
C)  $5 - \frac { 1 } { 20 } Q$ 
D)  $5 - \frac { 1 } { 5 } Q$ 
A) $5 - \frac { 1 } { 10 } Q$ 
B)  $1 - \frac { 1 } { 10 } Q$ 
C)  $5 - \frac { 1 } { 20 } Q$ 
D)  $5 - \frac { 1 } { 5 } Q$

Question 14

In general,microeconomic theory assumes that firms attempt to maximize the difference between

Accepted Answer

A) total revenue and accounting costs. 
B) price and marginal cost. 
C) total revenues and economic costs. 
D) economic costs and average cost. 
A) total revenue and accounting costs. 
B) price and marginal cost. 
C) total revenues and economic costs. 
D) economic costs and average cost.

Question 15

A firm's total revenue is equal to

Accepted Answer

A) total quantity produced times marginal cost. 
B) total quantity produced times market price. 
C) marginal revenue times total quantity produced. 
D) market price divided by total quantity produced. 
A) total quantity produced times marginal cost. 
B) total quantity produced times market price. 
C) marginal revenue times total quantity produced. 
D) market price divided by total quantity produced.

Question 16

If the demand faced by a firm is inelastic,selling one more unit of output will

Accepted Answer

A) increase revenues. 
B) decrease revenues. 
C) keep revenues constant. 
D) increase profits. 
A) increase revenues. 
B) decrease revenues. 
C) keep revenues constant. 
D) increase profits.

Question 17

In order to maximize profits,a firm that can sell all it wants without affecting price should produce

Accepted Answer

A) where average variable costs are minimized. 
B) where marginal cost is equal to average variable costs. 
C) where marginal cost is equal to price. 
D) where marginal cost is a minimum. 
A) where average variable costs are minimized. 
B) where marginal cost is equal to average variable costs. 
C) where marginal cost is equal to price. 
D) where marginal cost is a minimum.

Question 18

A firm that sought to "maximize market share" would choose to produce an output level for which marginal revenue was equal to

Accepted Answer

A) marginal cost 
B) average cost. 
C) price. 
D) zero. 
A) marginal cost 
B) average cost. 
C) price. 
D) zero.

Question 19

If the demand curve a firm faces shifts to the right,usually

Accepted Answer

A) it would be impossible to tell whether the marginal revenue curve shifts. 
B) the marginal revenue curve would shift to the left. 
C) the marginal revenue curve would shift to the right. 
D) the marginal revenue curve would not shift. 
A) it would be impossible to tell whether the marginal revenue curve shifts. 
B) the marginal revenue curve would shift to the left. 
C) the marginal revenue curve would shift to the right. 
D) the marginal revenue curve would not shift.

Question 20

An unregulated electric company is a monopolist and faces demand of Q = 50 - 10P. If the company has zero marginal costs,its profit-maximizing price is

Accepted Answer

A) 0 
B) 1 
C) 2.5 
D) 5 
A) 0 
B) 1 
C) 2.5 
D) 5

Suppose that a firm has to pay a 10% tax on revenue.The profit-maximizing level of output is ?

If an unregulated electric company is a monopolist and faces demand of Q = 50 - 10P.It has a constant marginal cost of 1 and must pay an environmental fee to the government of 0.2 per unit of output.In this situation,the profit-maximizing level of output is:

If a firm is a price taker,its marginal revenue is

Suppose that a firm has to pay a 10% tax on its total revenue.This has the effect of ?

A firm's marginal revenue is defined as

In order to maximize profits,a firm should produce at the output level for which

If a firm wished to maximize total revenues it should produce where

Suppose a farmer is a price taker in soybeans with cost functions given by ? TC = .1q² + 2q + 100 MC = .2q + 2 Suppose the farmer has to purchase a license for $50 per period in order to stay in business. In this case,its marginal cost function is

Suppose a farmer is a price taker for soybean sales with cost functions given by ? TC = .1q² + 2q + 30 MC = .2q + 2 The profit maximizing level of output is

If an unregulated electric company is a monopolist,faces demand of Q = 100 - 50P,and has a constant marginal cost of 1,the profit-maximizing price is

Suppose a farmer is a price taker in soybeans with cost functions given by ? TC = .1q² + 2q + 30 MC = .2q + 2 Suppose the farmer has to purchase a license for $50 per period in order to stay in business. In this case,its new total cost function is

If an unregulated electric company is a monopolist and faces demand of Q = 50 - 10P,its marginal revenue function is given by

In general,microeconomic theory assumes that firms attempt to maximize the difference between

A firm's total revenue is equal to

If the demand faced by a firm is inelastic,selling one more unit of output will

In order to maximize profits,a firm that can sell all it wants without affecting price should produce

A firm that sought to "maximize market share" would choose to produce an output level for which marginal revenue was equal to

If the demand curve a firm faces shifts to the right,usually

An unregulated electric company is a monopolist and faces demand of Q = 50 - 10P. If the company has zero marginal costs,its profit-maximizing price is

Economic Models

Utility and Choice

Demand Curves

Uncertainty

Game Theory

Production

Costs

Perfect Competition in a Single Market

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Pricing in Input Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Exam 8: Profit Maximization and Supply

Suppose that a firm has to pay a 10% tax on revenue.The profit-maximizing level of output is ?

If an unregulated electric company is a monopolist and faces demand of Q = 50 - 10P.It has a constant marginal cost of 1 and must pay an environmental fee to the government of 0.2 per unit of output.In this situation,the profit-maximizing level of output is:

If a firm is a price taker,its marginal revenue is

Suppose that a firm has to pay a 10% tax on its total revenue.This has the effect of ?

A firm's marginal revenue is defined as

In order to maximize profits,a firm should produce at the output level for which

If a firm wished to maximize total revenues it should produce where

Suppose a farmer is a price taker in soybeans with cost functions given by ? TC = .1q2 + 2q + 100 MC = .2q + 2 Suppose the farmer has to purchase a license for $50 per period in order to stay in business. In this case,its marginal cost function is

Suppose a farmer is a price taker for soybean sales with cost functions given by ? TC = .1q2 + 2q + 30 MC = .2q + 2 The profit maximizing level of output is

If an unregulated electric company is a monopolist,faces demand of Q = 100 - 50P,and has a constant marginal cost of 1,the profit-maximizing price is

Suppose a farmer is a price taker in soybeans with cost functions given by ? TC = .1q2 + 2q + 30 MC = .2q + 2 Suppose the farmer has to purchase a license for $50 per period in order to stay in business. In this case,its new total cost function is

If an unregulated electric company is a monopolist and faces demand of Q = 50 - 10P,its marginal revenue function is given by

In general,microeconomic theory assumes that firms attempt to maximize the difference between

A firm's total revenue is equal to

If the demand faced by a firm is inelastic,selling one more unit of output will

In order to maximize profits,a firm that can sell all it wants without affecting price should produce

A firm that sought to "maximize market share" would choose to produce an output level for which marginal revenue was equal to

If the demand curve a firm faces shifts to the right,usually

An unregulated electric company is a monopolist and faces demand of Q = 50 - 10P. If the company has zero marginal costs,its profit-maximizing price is

Economic Models

Utility and Choice

Demand Curves

Uncertainty

Game Theory

Production

Costs

Perfect Competition in a Single Market

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Pricing in Input Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Suppose a farmer is a price taker in soybeans with cost functions given by ? TC = .1q² + 2q + 100 MC = .2q + 2 Suppose the farmer has to purchase a license for $50 per period in order to stay in business. In this case,its marginal cost function is

Suppose a farmer is a price taker for soybean sales with cost functions given by ? TC = .1q² + 2q + 30 MC = .2q + 2 The profit maximizing level of output is

Suppose a farmer is a price taker in soybeans with cost functions given by ? TC = .1q² + 2q + 30 MC = .2q + 2 Suppose the farmer has to purchase a license for $50 per period in order to stay in business. In this case,its new total cost function is