Question 1

Marginal cost is

Accepted Answer

A) the change in total cost that results from hiring one more unit of labor. 
B) total cost divided by total output. 
C) the change in total variable cost that results from hiring one more unit of capital. 
D) the change in total cost that results from hiring one more unit of capital. 
E) the change in total cost that results from increasing output by one unit. 
A) the change in total cost that results from hiring one more unit of labor. 
B) total cost divided by total output. 
C) the change in total variable cost that results from hiring one more unit of capital. 
D) the change in total cost that results from hiring one more unit of capital. 
E) the change in total cost that results from increasing output by one unit.

Question 2

Costs that do not vary with output are called

Accepted Answer

A) total costs. 
B) short-run costs. 
C) long-run costs. 
D) variable costs. 
E) fixed costs. 
A) total costs. 
B) short-run costs. 
C) long-run costs. 
D) variable costs. 
E) fixed costs.

Question 3

Marginal cost increases with output because

Accepted Answer

A) capital becomes increasingly difficult to work with as more units of labor utilize it. 
B) marginal product increases with output. 
C) increasing amounts of input must be used to produce one more unit of output. 
D) total costs increase with output. 
E) more input must be used to produce more output. 
A) capital becomes increasingly difficult to work with as more units of labor utilize it. 
B) marginal product increases with output. 
C) increasing amounts of input must be used to produce one more unit of output. 
D) total costs increase with output. 
E) more input must be used to produce more output.

Question 4

The change in variable costs that results from producing one more unit of output is called

Accepted Answer

A) marginal variable cost. 
B) average variable cost. 
C) total variable cost. 
D) marginal cost. 
E) marginal product. 
A) marginal variable cost. 
B) average variable cost. 
C) total variable cost. 
D) marginal cost. 
E) marginal product.

Question 5

A variable factor is the type of input that varies with a firm's output level.

Accepted Answer

A) True 
 B)False

Question 6

The owner of a sole proprietorship

Accepted Answer

A) has unlimited liability and is responsible for all debts of the firm. 
B) assumes no responsibility for any debt of the firm and enjoys only limited profits. 
C) assumes no responsibility for any debt of the firm but also receives no profits 
D) has limited liability and shares the responsibility of all debts of the firm with others. 
E) has limited liability up to the total value of her or his own personal property. 
A) has unlimited liability and is responsible for all debts of the firm. 
B) assumes no responsibility for any debt of the firm and enjoys only limited profits. 
C) assumes no responsibility for any debt of the firm but also receives no profits 
D) has limited liability and shares the responsibility of all debts of the firm with others. 
E) has limited liability up to the total value of her or his own personal property.

Question 7

An increase in market demand has no effect on producer surplus because producer surplus is related to supply.

Accepted Answer

A) True 
 B)False

Question 8

A firm that considers price as a given and chooses quantity of output accordingly is called a

Accepted Answer

A) profit-maximizer. 
B) quantity-setter. 
C) market-taker. 
D) monopoly. 
E) price-taker. 
A) profit-maximizer. 
B) quantity-setter. 
C) market-taker. 
D) monopoly. 
E) price-taker.

Question 9

Other things being equal,when the market price increases,the producer surplus

Accepted Answer

A) increases. 
B) decreases. 
C) remains the same. 
D) increases and then decreases. 
E) cannot be determined given the available information. 
A) increases. 
B) decreases. 
C) remains the same. 
D) increases and then decreases. 
E) cannot be determined given the available information.

Question 10

The change in total output that occurs with a one-unit change in labor is called the

Accepted Answer

A) average productivity of labor. 
B) marginal product of labor. 
C) total product of labor. 
D) marginal benefit of labor. 
E) marginal cost of labor. 
A) average productivity of labor. 
B) marginal product of labor. 
C) total product of labor. 
D) marginal benefit of labor. 
E) marginal cost of labor.

Question 11

For a competitive firm,profit maximization occurs when

Accepted Answer

A) price equals marginal revenue. 
B) price equals marginal cost. 
C) marginal revenue equals total cost. 
D) marginal cost equals total cost. 
E) total revenue equals total cost. 
A) price equals marginal revenue. 
B) price equals marginal cost. 
C) marginal revenue equals total cost. 
D) marginal cost equals total cost. 
E) total revenue equals total cost.

Question 12

Which of the following statements concerning the slope of market supply is false?

Accepted Answer

A) Market supply usually gets steeper as output increases. 
B) The slope of a market supply curve depends on the slopes of individual marginal cost curves. 
C) The steeper marginal cost curves are for individual firms,the steeper market supply will be. 
D) The slope of market supply is somewhat dependent on the shape of the market demand curve. 
E) Individual marginal cost curves have positive slopes,and so does market supply. 
A) Market supply usually gets steeper as output increases. 
B) The slope of a market supply curve depends on the slopes of individual marginal cost curves. 
C) The steeper marginal cost curves are for individual firms,the steeper market supply will be. 
D) The slope of market supply is somewhat dependent on the shape of the market demand curve. 
E) Individual marginal cost curves have positive slopes,and so does market supply.

Question 13

Which of the following does not affect producer surplus in the short run?

Accepted Answer

A) Supply shifts to the left. 
B) A price ceiling below equilibrium is imposed by government. 
C) Wages paid to labor increase. 
D) Demand shifts to the right. 
E) Fixed costs for the typical firm increase. 
A) Supply shifts to the left. 
B) A price ceiling below equilibrium is imposed by government. 
C) Wages paid to labor increase. 
D) Demand shifts to the right. 
E) Fixed costs for the typical firm increase.

Question 14

The market supply curve is obtained by summing the total costs of all firms in the market.

Accepted Answer

A) True 
 B)False

Question 15

When price and quantity sold by a firm are multiplied,the result is called

Accepted Answer

A) marginal cost. 
B) total costs. 
C) marginal revenue. 
D) average revenue. 
E) total revenue. 
A) marginal cost. 
B) total costs. 
C) marginal revenue. 
D) average revenue. 
E) total revenue.

Question 16

Producer surplus is the

Accepted Answer

A) difference between the quantity supplied and the quantity demanded when price is above equilibrium. 
B) quantity of a good a producer cannot sell at the price he or she is asking. 
C) difference between the quantity produced in the market at a given price and the amount produced by a single firm at that price. 
D) difference between the market price of an item and what people are willing to pay. 
E) difference between the market price and the minimum amount of money a producer will accept for his or her product. 
A) difference between the quantity supplied and the quantity demanded when price is above equilibrium. 
B) quantity of a good a producer cannot sell at the price he or she is asking. 
C) difference between the quantity produced in the market at a given price and the amount produced by a single firm at that price. 
D) difference between the market price of an item and what people are willing to pay. 
E) difference between the market price and the minimum amount of money a producer will accept for his or her product.

Question 17

Suppose each firm in a market with 200 identical firms has a supply curve given by the following equation: q = -3 + .25P.How much will each firm produce when price is $25? What will be the market output at that price?

Accepted Answer

3.25; 650
Firm produ

Question 18

The added revenue that comes from producing and selling another unit of a good is called

Accepted Answer

A) marginal cost. 
B) price. 
C) marginal product. 
D) average revenue. 
E) marginal revenue. 
A) marginal cost. 
B) price. 
C) marginal product. 
D) average revenue. 
E) marginal revenue.

Question 19

The total cost curve

Accepted Answer

A) has a positive slope throughout. 
B) has a negative slope throughout. 
C) is vertical. 
D) is horizontal. 
E) can have a positive or negative slope throughout. 
A) has a positive slope throughout. 
B) has a negative slope throughout. 
C) is vertical. 
D) is horizontal. 
E) can have a positive or negative slope throughout.

Question 20

Variable costs are generally associated with the cost of

Accepted Answer

A) machinery. 
B) loan payments. 
C) capital. 
D) labor. 
E) rental income forgone by not renting facilities to someone else. 
A) machinery. 
B) loan payments. 
C) capital. 
D) labor. 
E) rental income forgone by not renting facilities to someone else.

Exam 6: The Supply Curve and the Behavior of Firms

Marginal cost is

Costs that do not vary with output are called

Marginal cost increases with output because

The change in variable costs that results from producing one more unit of output is called

A variable factor is the type of input that varies with a firm's output level.

The owner of a sole proprietorship

An increase in market demand has no effect on producer surplus because producer surplus is related to supply.

A firm that considers price as a given and chooses quantity of output accordingly is called a

Other things being equal,when the market price increases,the producer surplus

The change in total output that occurs with a one-unit change in labor is called the

For a competitive firm,profit maximization occurs when

Which of the following statements concerning the slope of market supply is false?

Which of the following does not affect producer surplus in the short run?

The market supply curve is obtained by summing the total costs of all firms in the market.

When price and quantity sold by a firm are multiplied,the result is called

Producer surplus is the

Suppose each firm in a market with 200 identical firms has a supply curve given by the following equation: q = -3 + .25P.How much will each firm produce when price is $25? What will be the market output at that price?

The added revenue that comes from producing and selling another unit of a good is called

The total cost curve

Variable costs are generally associated with the cost of

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