Question 1

Exhibit 6-7  
-Refer to Exhibit 6-7.Which of the following statements is false?

Accepted Answer

A) If market price is $20 and output is 6 units,producer surplus is -$7. 
B) If market price is $10,producer surplus is the same whether output is zero or 1 unit. 
C) If market price is $20 and 5 units are produced,producer surplus will increase if production is decreased one unit. 
D) If market price is $16,producer surplus is the same when 3 units are produced as when 2 units are produced. 
E) If market price is $17 and 4 units are produced,producer surplus will increase if production is decreased by 1 unit. 
A) If market price is $20 and output is 6 units,producer surplus is -$7. 
B) If market price is $10,producer surplus is the same whether output is zero or 1 unit. 
C) If market price is $20 and 5 units are produced,producer surplus will increase if production is decreased one unit. 
D) If market price is $16,producer surplus is the same when 3 units are produced as when 2 units are produced. 
E) If market price is $17 and 4 units are produced,producer surplus will increase if production is decreased by 1 unit.

Question 2

The firm's supply curve is its marginal cost curve.

Accepted Answer

A) True 
 B)False

Question 3

What is the major characteristic of a competitive market?

Accepted Answer

A market is competit

Question 4

What are the two primary inputs in today's production? Which one of these inputs is variable and which one is fixed?

Accepted Answer

The primary inputs are labor a

Question 5

Explain why the firm's supply curve is its marginal cost curve.

Accepted Answer

A supply curve indicates how much a firm

Question 6

Exhibit 6-5  
-Refer to Exhibit 6-5.Which of the following statements is not true?

Accepted Answer

A) Fixed costs equal total costs when output equals zero. 
B) The output closest to the profit-maximizing level is Q3. 
C) Profit is the same at Q1 as it is at Q4. 
D) Profit is equal to zero when output equals zero. 
E) Marginal cost is less than marginal revenue at Q2. 
A) Fixed costs equal total costs when output equals zero. 
B) The output closest to the profit-maximizing level is Q3. 
C) Profit is the same at Q1 as it is at Q4. 
D) Profit is equal to zero when output equals zero. 
E) Marginal cost is less than marginal revenue at Q2.

Question 7

The slope of the total cost curve is called

Accepted Answer

A) diminishing returns. 
B) marginal cost. 
C) marginal product. 
D) marginal benefit. 
E) total product. 
A) diminishing returns. 
B) marginal cost. 
C) marginal product. 
D) marginal benefit. 
E) total product.

Question 8

In a competitive market,price is taken as given by

Accepted Answer

A) both buyers and sellers. 
B) neither buyers nor sellers. 
C) buyers only. 
D) sellers only. 
E) the government. 
A) both buyers and sellers. 
B) neither buyers nor sellers. 
C) buyers only. 
D) sellers only. 
E) the government.

Question 9

When fertilizer yields diminishing returns in the production of potatoes,

Accepted Answer

A) output increases only if fertilizer input is increased. 
B) additional fertilizer causes decreased production. 
C) doubling fertilizer input less than doubles output. 
D) marginal cost decreases as more fertilizer is added. 
E) doubling fertilizer input more than doubles output. 
A) output increases only if fertilizer input is increased. 
B) additional fertilizer causes decreased production. 
C) doubling fertilizer input less than doubles output. 
D) marginal cost decreases as more fertilizer is added. 
E) doubling fertilizer input more than doubles output.

Question 10

Exhibit 6-6  
-Refer to Exhibit 6-6.Let market price be $15 and fixed costs be $5.Calculate the profit at the profit-maximizing output level.

Accepted Answer

$23

The profit-maximizing output level

Question 11

Suppose a firm's supply curve can be expressed by the following equation: Q = .5P.Also suppose that there are 30 identical firms in a market.Write the equation for the market supply curve.

Accepted Answer

Q = 15P
Each of the 30 firms p

Question 12

The difference between producer surplus and profits for a single firm is fixed costs.

Accepted Answer

A) True 
 B)False

Question 13

Suppose a firm's supply curve can be expressed as -4 + 2P.Calculate the firm's producer surplus when price is $25.

Accepted Answer

$529 Firm output is -4 + 2(25)

Question 14

Which of the following formulas is not a valid characterization of producer surplus?

Accepted Answer

A) Total revenue - the sum of marginal costs 
B) Profit + fixed costs 
C) Profit - marginal costs 
D) Total revenue - (total costs - fixed costs) 
E) (P - MC1)+ (P - MC2)+ (P - MC3)+ J + (P - MCQ),where Q = quantity produced and sold 
A) Total revenue - the sum of marginal costs 
B) Profit + fixed costs 
C) Profit - marginal costs 
D) Total revenue - (total costs - fixed costs) 
E) (P - MC1)+ (P - MC2)+ (P - MC3)+ J + (P - MCQ),where Q = quantity produced and sold

Question 15

The difference between the market price of a good and a producer's marginal cost of every unit of the good is called

Accepted Answer

A) consumer surplus. 
B) producer surplus. 
C) marginal surplus. 
D) excess supply. 
E) market surplus. 
A) consumer surplus. 
B) producer surplus. 
C) marginal surplus. 
D) excess supply. 
E) market surplus.

Question 16

For a competitive firm,if any level of production results in losses,the loss-minimizing output level is when

Accepted Answer

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

Question 17

The slope of the supply curve reflects a(n)

Accepted Answer

A) increasing variable cost. 
B) decreasing variable cost. 
C) increasing total cost. 
D) increasing marginal cost. 
E) decreasing marginal cost. 
A) increasing variable cost. 
B) decreasing variable cost. 
C) increasing total cost. 
D) increasing marginal cost. 
E) decreasing marginal cost.

Question 18

Separation of ownership from control is most commonly found in a

Accepted Answer

A) sole proprietorship. 
B) partnership. 
C) corporation. 
D) nonprofit firm. 
E) consortium. 
A) sole proprietorship. 
B) partnership. 
C) corporation. 
D) nonprofit firm. 
E) consortium.

Question 19

The slope of the total cost curve as output increases reflects

Accepted Answer

A) decreasing marginal benefit. 
B) increasing marginal benefit. 
C) decreasing marginal cost. 
D) increasing marginal cost. 
E) increasing variable cost. 
A) decreasing marginal benefit. 
B) increasing marginal benefit. 
C) decreasing marginal cost. 
D) increasing marginal cost. 
E) increasing variable cost.

Question 20

Explain,in words,the relationship between marginal product and marginal cost.

Accepted Answer

Marginal product is the change in output

Exam 6: The Supply Curve and the Behavior of Firms

Exhibit 6-7 -Refer to Exhibit 6-7.Which of the following statements is false?

The firm's supply curve is its marginal cost curve.

What is the major characteristic of a competitive market?

What are the two primary inputs in today's production? Which one of these inputs is variable and which one is fixed?

Explain why the firm's supply curve is its marginal cost curve.

Exhibit 6-5 -Refer to Exhibit 6-5.Which of the following statements is not true?

The slope of the total cost curve is called

In a competitive market,price is taken as given by

When fertilizer yields diminishing returns in the production of potatoes,

Exhibit 6-6 -Refer to Exhibit 6-6.Let market price be $15 and fixed costs be $5.Calculate the profit at the profit-maximizing output level.

Suppose a firm's supply curve can be expressed by the following equation: Q = .5P.Also suppose that there are 30 identical firms in a market.Write the equation for the market supply curve.

The difference between producer surplus and profits for a single firm is fixed costs.

Suppose a firm's supply curve can be expressed as -4 + 2P.Calculate the firm's producer surplus when price is $25.

Which of the following formulas is not a valid characterization of producer surplus?

The difference between the market price of a good and a producer's marginal cost of every unit of the good is called

For a competitive firm,if any level of production results in losses,the loss-minimizing output level is when

The slope of the supply curve reflects a(n)

Separation of ownership from control is most commonly found in a

The slope of the total cost curve as output increases reflects

Explain,in words,the relationship between marginal product and marginal cost.

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

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