Question 1

Land is commonly considered a fixed factor of production.

Accepted Answer

A) True 
 B)False  True

Question 2

A monopoly is a price-maker.

Accepted Answer

A) True 
 B)False  True

Question 3

Firms are assumed to maximize

Accepted Answer

A) inputs. 
B) profits. 
C) wages. 
D) output price. 
E) output quantity. 
A) inputs. 
B) profits. 
C) wages. 
D) output price. 
E) output quantity. B

Question 4

Profit is usually ____ producer surplus for a firm.

Accepted Answer

A) less than 
B) double 
C) greater than 
D) half of 
E) the same as 
A) less than 
B) double 
C) greater than 
D) half of 
E) the same as

Question 5

Diminishing returns to labor is the term used to describe what happens when output falls as more labor is employed in a firm.

Accepted Answer

A) True 
 B)False

Question 6

The table below shows the cost schedule for Walworth Baker.   
(A)Calculate the marginal cost schedule for Walworth Baker.
(B)Draw the firm's supply curve.
(C)Walworth Baker can sell as many muffins as it wants-at the market price $4 for a dozen muffins.How many muffins will this bakery sell each day? Use your diagram to show how much producer surplus the bakery receives.

Accepted Answer

(A) @#IMG-DLM& 
(B) @#IMG-DLM& 
(C)
Walworth Baker

Question 7

A competitive firm's marginal revenue curve is the same as its demand curve.

Accepted Answer

A) True 
 B)False

Question 8

Producer surplus equals total revenues minus total costs.

Accepted Answer

A) True 
 B)False

Question 9

Suppose you are able to babysit at $10 per hour.The only cost to you is the opportunity cost of your time.For the first 2 hours,the opportunity cost of your time is $7 per hour.But after 2 hours,the opportunity cost of your time rises to $13 because of other commitments.Draw the marginal cost to you of babysitting.Draw in the price you receive for babysitting.For how long will you babysit? Calculate your producer surplus.

Accepted Answer

The answer of Suppose you are able to babysit at...

Question 10

Holding everything else equal,total revenue increases

Accepted Answer

A) only when quantity increases. 
B) only when price increases. 
C) whenever total costs increase. 
D) when either price or quantity increase. 
E) only when both price and quantity increase. 
A) only when quantity increases. 
B) only when price increases. 
C) whenever total costs increase. 
D) when either price or quantity increase. 
E) only when both price and quantity increase.

Question 11

If a competitive firm continues to produce when marginal revenue is less than marginal cost,then each additional unit of output

Accepted Answer

A) maximizes profits or minimizes losses. 
B) minimizes losses. 
C) reduces total profit. 
D) increases total profit. 
E) increases both total costs and total revenue. 
A) maximizes profits or minimizes losses. 
B) minimizes losses. 
C) reduces total profit. 
D) increases total profit. 
E) increases both total costs and total revenue.

Question 12

Exhibit 6-2  
-Refer to Exhibit 6-2.The marginal cost of the second pound of bananas is

Accepted Answer

A) $25. 
B) $2. 
C) $3. 
D) $4. 
E) $0. 
A) $25. 
B) $2. 
C) $3. 
D) $4. 
E) $0.

Question 13

An individual firm in a competitive market

Accepted Answer

A) decides,given the market price,how much to produce and sell. 
B) has no control over the price or the quantity it produces and sells. 
C) takes the market-determined amount it should sell as given,and then,based on this amount,determines what price to charge. 
D) decides what price to charge and how much to produce and sell. 
E) has control over the price but not the quantity to produce and sell. 
A) decides,given the market price,how much to produce and sell. 
B) has no control over the price or the quantity it produces and sells. 
C) takes the market-determined amount it should sell as given,and then,based on this amount,determines what price to charge. 
D) decides what price to charge and how much to produce and sell. 
E) has control over the price but not the quantity to produce and sell.

Question 14

The competitive firm sets output to equal output price and marginal cost.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is typically a variable factor of production?

Accepted Answer

A) Land 
B) Equipment 
C) Plant 
D) Labor 
E) Money 
A) Land 
B) Equipment 
C) Plant 
D) Labor 
E) Money

Question 16

In economics,the main objective of a firm is to maximize customer satisfaction.

Accepted Answer

A) True 
 B)False

Question 17

By definition,profits are

Accepted Answer

A) total output minus total inputs. 
B) total revenue plus total costs. 
C) total revenue minus total costs. 
D) total inputs minus total output. 
E) total costs minus total revenue. 
A) total output minus total inputs. 
B) total revenue plus total costs. 
C) total revenue minus total costs. 
D) total inputs minus total output. 
E) total costs minus total revenue.

Question 18

Which of the following is an example of a firm?

Accepted Answer

A) A local government agency 
B) A family with four children 
C) A grocery store 
D) A public school 
E) The U.S.Department of Commerce 
A) A local government agency 
B) A family with four children 
C) A grocery store 
D) A public school 
E) The U.S.Department of Commerce

Question 19

Exhibit 6-5  
-Refer to Exhibit 6-5.Profits become negative when the firm produces

Accepted Answer

A) between Q1 and Q2. 
B) between Q2 and Q3. 
C) between Q3 and Q4. 
D) more than Q4. 
E) nothing at all. 
A) between Q1 and Q2. 
B) between Q2 and Q3. 
C) between Q3 and Q4. 
D) more than Q4. 
E) nothing at all.

Question 20

In the pumpkin-growing firm example in the text,the firm is a price-taker because

Accepted Answer

A) the firm does not have the ability to charge whatever price it wants to charge. 
B) the firm is not a profit-maximizing firm. 
C) price setting is too complicated for an individual firm. 
D) the market for pumpkins is a competitive market. 
E) it faces no demand. 
A) the firm does not have the ability to charge whatever price it wants to charge. 
B) the firm is not a profit-maximizing firm. 
C) price setting is too complicated for an individual firm. 
D) the market for pumpkins is a competitive market. 
E) it faces no demand.

Exam 6: The Supply Curve and the Behavior of Firms

Land is commonly considered a fixed factor of production.

A monopoly is a price-maker.

Firms are assumed to maximize

Profit is usually ____ producer surplus for a firm.

Diminishing returns to labor is the term used to describe what happens when output falls as more labor is employed in a firm.

A competitive firm's marginal revenue curve is the same as its demand curve.

Producer surplus equals total revenues minus total costs.

Holding everything else equal,total revenue increases

If a competitive firm continues to produce when marginal revenue is less than marginal cost,then each additional unit of output

Exhibit 6-2 -Refer to Exhibit 6-2.The marginal cost of the second pound of bananas is

An individual firm in a competitive market

The competitive firm sets output to equal output price and marginal cost.

Which of the following is typically a variable factor of production?

In economics,the main objective of a firm is to maximize customer satisfaction.

By definition,profits are

Which of the following is an example of a firm?

Exhibit 6-5 -Refer to Exhibit 6-5.Profits become negative when the firm produces

In the pumpkin-growing firm example in the text,the firm is a price-taker because

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

The Demand Curve and the Behavior of Consumers

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, transfers, and Income Distribution

Public Goods, externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth and Globalization

International Trade

International Finance

Reading,understanding,and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Present Discounted Value

The Miracle of Compound Growth

Deriving the Growth Accounting Formula

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

Filters