Question 1

Exhibit 6-9  
-Refer to Exhibit 6-9.Calculate the producer surplus.

Accepted Answer

$810 
Prod

Question 2

When marginal cost is greater than marginal revenue,then a profit-maximizing firm must

Accepted Answer

A) increase output. 
B) hold output constant. 
C) decrease output. 
D) stop production. 
E) reduce the price it charges. 
A) increase output. 
B) hold output constant. 
C) decrease output. 
D) stop production. 
E) reduce the price it charges.

Question 3

Which of the following statements is true for any profit-maximizing firm?

Accepted Answer

A) The firm will produce at the level of output where price equals marginal revenue. 
B) The firm will produce at the level of output where price equals marginal cost. 
C) The firm will produce at the level of output where marginal revenue equals marginal cost. 
D) The firm will produce at the level of output where marginal revenue is maximized. 
E) The firm will produce at the level of output where marginal cost is minimized. 
A) The firm will produce at the level of output where price equals marginal revenue. 
B) The firm will produce at the level of output where price equals marginal cost. 
C) The firm will produce at the level of output where marginal revenue equals marginal cost. 
D) The firm will produce at the level of output where marginal revenue is maximized. 
E) The firm will produce at the level of output where marginal cost is minimized.

Question 4

If the market price of a good is $3,then a profit-maximizing competitive firm will produce

Accepted Answer

A) after its marginal cost exceeds $3. 
B) until its marginal cost reaches $3. 
C) after its marginal revenue exceeds $3. 
D) until its marginal revenue reaches $3. 
E) nothing at all. 
A) after its marginal cost exceeds $3. 
B) until its marginal cost reaches $3. 
C) after its marginal revenue exceeds $3. 
D) until its marginal revenue reaches $3. 
E) nothing at all.

Question 5

Exhibit 6-5  
-Refer to Exhibit 6-5.The output level most likely to maximize profit is

Accepted Answer

A) zero. 
B) Q1. 
C) Q3. 
D) Q2. 
E) Q4. 
A) zero. 
B) Q1. 
C) Q3. 
D) Q2. 
E) Q4.

Question 6

Exhibit 6-4  
-Refer to Exhibit 6-4.Suppose the firm has fixed costs of $30.What is the total cost if output is 5 units?

Accepted Answer

A) $80 
B) $104 
C) $30 
D) $50 
E) $62 
A) $80 
B) $104 
C) $30 
D) $50 
E) $62

Question 7

If price is greater than marginal cost and output is infinitely divisible,then

Accepted Answer

A) decreasing output decreases revenue less than it decreases cost. 
B) increasing output increases revenue more than it increases cost. 
C) increasing output increases revenue less than it increases cost. 
D) decreasing output increases revenue more than it increases cost. 
E) increasing output has no effect on revenue and cost. 
A) decreasing output decreases revenue less than it decreases cost. 
B) increasing output increases revenue more than it increases cost. 
C) increasing output increases revenue less than it increases cost. 
D) decreasing output increases revenue more than it increases cost. 
E) increasing output has no effect on revenue and cost.

Question 8

Exhibit 6-8  
-Refer to Exhibit 6-8.Producer surplus in the market is illustrated by area

Accepted Answer

A) A + B. 
B) B. 
C) A. 
D) A + B - C. 
E) C. 
A) A + B. 
B) B. 
C) A. 
D) A + B - C. 
E) C.

Question 9

Revenue is the only factor that affects profits.

Accepted Answer

A) True 
 B)False

Question 10

An improvement in production technology shifts marginal cost

Accepted Answer

A) downward and does not affect market supply. 
B) and market supply downward. 
C) and market supply upward. 
D) downward and shifts market supply upward. 
E) upward and shifts market supply downward. 
A) downward and does not affect market supply. 
B) and market supply downward. 
C) and market supply upward. 
D) downward and shifts market supply upward. 
E) upward and shifts market supply downward.

Question 11

Due to the indivisibility of output,

Accepted Answer

A) market supply must be rougher than the individual firm's supply curve. 
B) market supply can be smoother than the individual firm's supply curve. 
C) an individual firm's supply curves cannot be summed. 
D) it is impossible to obtain a valid market supply curve. 
E) market supply is always equal to any individual firm's supply. 
A) market supply must be rougher than the individual firm's supply curve. 
B) market supply can be smoother than the individual firm's supply curve. 
C) an individual firm's supply curves cannot be summed. 
D) it is impossible to obtain a valid market supply curve. 
E) market supply is always equal to any individual firm's supply.

Question 12

Why is an individual firm in a competitive market a price-taker?

Accepted Answer

If a firm were producing at a price high

Question 13

A graph showing how much total output results for any given amount of input is called a(n)

Accepted Answer

A) labor function. 
B) production function. 
C) marginal product curve. 
D) variable cost curve. 
E) earnings schedule. 
A) labor function. 
B) production function. 
C) marginal product curve. 
D) variable cost curve. 
E) earnings schedule.

Question 14

In a competitive market,no single consumer or producer can set the market price.

Accepted Answer

A) True 
 B)False

Question 15

Diminishing returns occur when the

Accepted Answer

A) marginal product of an input is positive. 
B) marginal product of an input is zero. 
C) marginal product of an input is decreasing. 
D) total product of an input is zero. 
E) total product of an input is negative. 
A) marginal product of an input is positive. 
B) marginal product of an input is zero. 
C) marginal product of an input is decreasing. 
D) total product of an input is zero. 
E) total product of an input is negative.

Question 16

A price-taking firm cannot affect its own output price because

Accepted Answer

A) price is determined by consumers,not producers. 
B) market demand is perfectly elastic; that is,even a tiny increase in price results in zero quantity demanded. 
C) it is only one firm among many,so the price is determined in the market as a whole. 
D) consumer preferences dictate a single price in a competitive market. 
E) of government statutes,such as price floors and price ceilings. 
A) price is determined by consumers,not producers. 
B) market demand is perfectly elastic; that is,even a tiny increase in price results in zero quantity demanded. 
C) it is only one firm among many,so the price is determined in the market as a whole. 
D) consumer preferences dictate a single price in a competitive market. 
E) of government statutes,such as price floors and price ceilings.

Question 17

Exhibit 6-8  
-Refer to Exhibit 6-8.Total industry profits are illustrated by

Accepted Answer

A) area B. 
B) nothing; nothing in the figure illustrates industry profits. 
C) area C. 
D) area A. 
E) area A + B. 
A) area B. 
B) nothing; nothing in the figure illustrates industry profits. 
C) area C. 
D) area A. 
E) area A + B.

Question 18

Refer to the table below.Find the fixed costs and the producer surplus when the firm produces the profit-maximizing quantity.What is the relationship between producer surplus and fixed costs?

Accepted Answer

The fixed costs are $80,which equals the

Question 19

Exhibit 6-4  
-Refer to Exhibit 6-4.Assume that fixed costs equal $30.If the price is $20,the profit that results at the profit-maximizing output level is

Accepted Answer

A) $50. 
B) $38. 
C) $20. 
D) -$4. 
E) $80. 
A) $50. 
B) $38. 
C) $20. 
D) -$4. 
E) $80.

Question 20

A corporation differs from other forms of businesses because it

Accepted Answer

A) is required to own a seat on a stock exchange. 
B) has a lower debt ratio. 
C) has no tax liability. 
D) is characterized by limited profits. 
E) is owned by people who enjoy limited liability. 
A) is required to own a seat on a stock exchange. 
B) has a lower debt ratio. 
C) has no tax liability. 
D) is characterized by limited profits. 
E) is owned by people who enjoy limited liability.

Exam 6: The Supply Curve and the Behavior of Firms

Exhibit 6-9 -Refer to Exhibit 6-9.Calculate the producer surplus.

When marginal cost is greater than marginal revenue,then a profit-maximizing firm must

Which of the following statements is true for any profit-maximizing firm?

If the market price of a good is $3,then a profit-maximizing competitive firm will produce

Exhibit 6-5 -Refer to Exhibit 6-5.The output level most likely to maximize profit is

Exhibit 6-4 -Refer to Exhibit 6-4.Suppose the firm has fixed costs of $30.What is the total cost if output is 5 units?

If price is greater than marginal cost and output is infinitely divisible,then

Exhibit 6-8 -Refer to Exhibit 6-8.Producer surplus in the market is illustrated by area

Revenue is the only factor that affects profits.

An improvement in production technology shifts marginal cost

Due to the indivisibility of output,

Why is an individual firm in a competitive market a price-taker?

A graph showing how much total output results for any given amount of input is called a(n)

In a competitive market,no single consumer or producer can set the market price.

Diminishing returns occur when the

A price-taking firm cannot affect its own output price because

Exhibit 6-8 -Refer to Exhibit 6-8.Total industry profits are illustrated by

Refer to the table below.Find the fixed costs and the producer surplus when the firm produces the profit-maximizing quantity.What is the relationship between producer surplus and fixed costs?

Exhibit 6-4 -Refer to Exhibit 6-4.Assume that fixed costs equal $30.If the price is $20,the profit that results at the profit-maximizing output level is

A corporation differs from other forms of businesses because it

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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