Question 1

A firm is a(n)

Accepted Answer

A) organization formed to save on income taxes. 
B) organization that produces goods and services. 
C) entity that produces only services. 
D) required organization mandated by government for tax purposes. 
E) law representative for small businesses. 
A) organization formed to save on income taxes. 
B) organization that produces goods and services. 
C) entity that produces only services. 
D) required organization mandated by government for tax purposes. 
E) law representative for small businesses.

Question 2

Suppose a firm receives $10 for selling one additional unit of its product but that additional unit costs the firm $1 to produce.The producer surplus for the additional unit of product is

Accepted Answer

A) $1. 
B) $5.5. 
C) $9. 
D) $11. 
E) $110. 
A) $1. 
B) $5.5. 
C) $9. 
D) $11. 
E) $110.

Question 3

Consider the information in the table below:   Plot the total revenue and total cost curves for this firm.What is the maximum economic profit this firm can earn? How much will the entrepreneur earn when the firm is maximizing profits? Do the slopes of the two curves appear to be the same at the maximum profit level?

Accepted Answer

@#IMG-DLM& Profits are being maximized a

Question 4

To derive a firm's supply curve,we assume that a firm chooses to produce where

Accepted Answer

A) sales are at a maximum. 
B) employment is at a maximum. 
C) profits are at a maximum. 
D) total revenue is at a maximum. 
E) total cost is at a minimum. 
A) sales are at a maximum. 
B) employment is at a maximum. 
C) profits are at a maximum. 
D) total revenue is at a maximum. 
E) total cost is at a minimum.

Question 5

Exhibit 6-5  
-Refer to Exhibit 6-5.At Q4,

Accepted Answer

A) total revenue is equal to zero. 
B) marginal revenue is negative. 
C) total profit is equal to zero. 
D) total profit is negative. 
E) both marginal profit and marginal cost are negative. 
A) total revenue is equal to zero. 
B) marginal revenue is negative. 
C) total profit is equal to zero. 
D) total profit is negative. 
E) both marginal profit and marginal cost are negative.

Question 6

Explain the difference between profit and producer surplus.

Accepted Answer

Profit is total revenue (TR + P @#LAT-DLM& q)minus

Question 7

When total product is rising,marginal product

Accepted Answer

A) must be negative. 
B) must be zero. 
C) must be positive. 
D) can be either negative or positive. 
E) must be rising as well. 
A) must be negative. 
B) must be zero. 
C) must be positive. 
D) can be either negative or positive. 
E) must be rising as well.

Question 8

Exhibit 6-1  
-Refer to Exhibit 6-1.Diminishing returns to labor is illustrated by

Accepted Answer

A) increasing output. 
B) decreasing output. 
C) output increasing at a decreasing rate. 
D) output increasing at an increasing rate. 
E) increasing input. 
A) increasing output. 
B) decreasing output. 
C) output increasing at a decreasing rate. 
D) output increasing at an increasing rate. 
E) increasing input.

Question 9

A competitive market is

Accepted Answer

A) one in which firms cannot change output levels. 
B) any market with several firms in it. 
C) a market with a single firm. 
D) one in which a single firm cannot influence market price. 
E) one in which consumers compete to buy goods and services. 
A) one in which firms cannot change output levels. 
B) any market with several firms in it. 
C) a market with a single firm. 
D) one in which a single firm cannot influence market price. 
E) one in which consumers compete to buy goods and services.

Question 10

Name one industry in which firms are price-takers.Name one industry in which firms are not price-takers.Suppose you set up a business where you sell lemonade on a street.Would you be a price-taker or a price-maker?

Accepted Answer

One industry in which firms are price-ta

Question 11

Marginal revenue is the change in

Accepted Answer

A) total profit from changing output by one unit. 
B) total revenue as a result of changing output by one unit. 
C) average revenue as a result of changing output by one unit. 
D) total revenue as a result of changing input by one unit. 
E) total cost as a result of changing output by one unit. 
A) total profit from changing output by one unit. 
B) total revenue as a result of changing output by one unit. 
C) average revenue as a result of changing output by one unit. 
D) total revenue as a result of changing input by one unit. 
E) total cost as a result of changing output by one unit.

Question 12

Total costs are

Accepted Answer

A) variable costs plus average cost. 
B) marginal cost plus average cost. 
C) fixed costs plus variable costs. 
D) marginal cost minus average cost. 
E) fixed costs minus variable costs. 
A) variable costs plus average cost. 
B) marginal cost plus average cost. 
C) fixed costs plus variable costs. 
D) marginal cost minus average cost. 
E) fixed costs minus variable costs.

Question 13

Why is a monopoly a price-maker?

Accepted Answer

A monopoly is a single produce

Question 14

Exhibit 6-3  
-Refer to Exhibit 6-3.What is the profit-maximizing output level if output price is $16?

Accepted Answer

5 units
Calculate total revenue at each

Question 15

When output changes,the profit-maximizing firm must consider

Accepted Answer

A) only whether output price is affected. 
B) only how much total revenue is affected. 
C) the change in marginal cost only. 
D) only how much total cost is affected. 
E) how much both total cost and total revenue are affected. 
A) only whether output price is affected. 
B) only how much total revenue is affected. 
C) the change in marginal cost only. 
D) only how much total cost is affected. 
E) how much both total cost and total revenue are affected.

Question 16

The supply curve obtained from the relationship between profits and production is different from the supply curve obtained from the relationship between price and marginal cost.

Accepted Answer

A) True 
 B)False

Question 17

The reason the firm's supply curve slopes upward is because its

Accepted Answer

A) total cost curve slopes upward. 
B) market supply curve slopes upward. 
C) total revenue curve slopes upward. 
D) marginal cost curve slopes upward. 
E) marginal product curve slopes upward. 
A) total cost curve slopes upward. 
B) market supply curve slopes upward. 
C) total revenue curve slopes upward. 
D) marginal cost curve slopes upward. 
E) marginal product curve slopes upward.

Question 18

The curve that indicates how much output a profit-maximizing competitive firm will produce at any given price is the

Accepted Answer

A) marginal revenue curve. 
B) total revenue curve. 
C) marginal cost curve. 
D) total cost curve. 
E) fixed cost curve. 
A) marginal revenue curve. 
B) total revenue curve. 
C) marginal cost curve. 
D) total cost curve. 
E) fixed cost curve.

Question 19

What is the relationship between the slope of the total cost curve and marginal cost? Explain.

Accepted Answer

The slope of the total cost curve and ma

Question 20

A competitive market is one in which many firms compete for customers and end up charging a common market price.

Accepted Answer

A) True 
 B)False

Exam 6: The Supply Curve and the Behavior of Firms

A firm is a(n)

Suppose a firm receives $10 for selling one additional unit of its product but that additional unit costs the firm $1 to produce.The producer surplus for the additional unit of product is

To derive a firm's supply curve,we assume that a firm chooses to produce where

Exhibit 6-5 -Refer to Exhibit 6-5.At Q4,

Explain the difference between profit and producer surplus.

When total product is rising,marginal product

Exhibit 6-1 -Refer to Exhibit 6-1.Diminishing returns to labor is illustrated by

A competitive market is

Name one industry in which firms are price-takers.Name one industry in which firms are not price-takers.Suppose you set up a business where you sell lemonade on a street.Would you be a price-taker or a price-maker?

Marginal revenue is the change in

Total costs are

Why is a monopoly a price-maker?

Exhibit 6-3 -Refer to Exhibit 6-3.What is the profit-maximizing output level if output price is $16?

When output changes,the profit-maximizing firm must consider

The supply curve obtained from the relationship between profits and production is different from the supply curve obtained from the relationship between price and marginal cost.

The reason the firm's supply curve slopes upward is because its

The curve that indicates how much output a profit-maximizing competitive firm will produce at any given price is the

What is the relationship between the slope of the total cost curve and marginal cost? Explain.

A competitive market is one in which many firms compete for customers and end up charging a common market price.

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

Exhibit 6-5 -Refer to Exhibit 6-5.At Q₄,