Question 1

Where does producer surplus get its name? That is,why do economists call it a surplus?

Accepted Answer

Producer surplus is the difference betwe

Question 2

A market that includes only a single firm is called a(n)

Accepted Answer

A) monopsony. 
B) monopoly. 
C) single-firm market. 
D) competitive market. 
E) oligopoly. 
A) monopsony. 
B) monopoly. 
C) single-firm market. 
D) competitive market. 
E) oligopoly.

Question 3

The approach based on the relationship between price and marginal cost brings about the same supply curve as what is implied by the approach based on profit maximization.

Accepted Answer

A) True 
 B)False

Question 4

By definition,a profit-maximizing firm is a monopoly.

Accepted Answer

A) True 
 B)False

Question 5

What is the profit-maximization rule? Explain why profit is maximized when the rule is met.

Accepted Answer

Setting output so that price equals marg

Question 6

A firm is one of the terms for a business organization.

Accepted Answer

A) True 
 B)False

Question 7

If marginal cost increases,then the market supply curve shifts to the left.

Accepted Answer

A) True 
 B)False

Question 8

If the marginal cost curves of all the firms in an industry are horizontally summed,one obtains

Accepted Answer

A) market demand. 
B) total industry cost. 
C) nothing of value. 
D) market supply. 
E) total fixed costs. 
A) market demand. 
B) total industry cost. 
C) nothing of value. 
D) market supply. 
E) total fixed costs.

Question 9

In economics,firms are assumed to

Accepted Answer

A) maximize output prices. 
B) minimize output prices. 
C) maximize profits. 
D) maximize consumer surplus. 
E) maximize customer satisfaction. 
A) maximize output prices. 
B) minimize output prices. 
C) maximize profits. 
D) maximize consumer surplus. 
E) maximize customer satisfaction.

Question 10

All types of firms suffer from managerial conflicts.

Accepted Answer

A) True 
 B)False

Question 11

Variable costs are those that

Accepted Answer

A) vary with output. 
B) are fixed when output changes. 
C) decrease when output increases. 
D) vary with input. 
E) can change even when output is constant. 
A) vary with output. 
B) are fixed when output changes. 
C) decrease when output increases. 
D) vary with input. 
E) can change even when output is constant.

Question 12

Exhibit 6-7  
-Refer to Exhibit 6-7.If market price is $18,producer surplus for the profit-maximizing firm is

Accepted Answer

A) $14. 
B) $15. 
C) $13. 
D) $8. 
E) $11. 
A) $14. 
B) $15. 
C) $13. 
D) $8. 
E) $11.

Question 13

Marginal cost increases because

Accepted Answer

A) marginal product decreases. 
B) the price of labor decreases. 
C) marginal product increases. 
D) the price of labor increases. 
E) marginal product is constant. 
A) marginal product decreases. 
B) the price of labor decreases. 
C) marginal product increases. 
D) the price of labor increases. 
E) marginal product is constant.

Question 14

Partnerships differ from sole proprietorships because partnerships

Accepted Answer

A) generate fewer profits than do sole proprietorships. 
B) are characterized by unlimited liability and sole proprietorships are not. 
C) consist of two or more partners sharing the responsibilities of the firm and sole proprietorships do not. 
D) require a written agreement and sole proprietorships do not. 
E) require a state charter and sole proprietorships do not. 
A) generate fewer profits than do sole proprietorships. 
B) are characterized by unlimited liability and sole proprietorships are not. 
C) consist of two or more partners sharing the responsibilities of the firm and sole proprietorships do not. 
D) require a written agreement and sole proprietorships do not. 
E) require a state charter and sole proprietorships do not.

Question 15

Draw a graph of total revenue and total cost for a competitive firm that is maximizing profit but just breaking even.Mark the profit-maximizing output level.

Accepted Answer

The answer of Draw a graph of total revenue and...

Question 16

Producer surplus is just an economist's technical name for profit.

Accepted Answer

A) True 
 B)False

Question 17

Profit maximization is the basic assumption for all types of corporations,but not for sole proprietorships.

Accepted Answer

A) True 
 B)False

Question 18

Total revenue is the price of a good times its quantity.

Accepted Answer

A) True 
 B)False

Question 19

Production in the short run requires

Accepted Answer

A) no factor of production. 
B) both fixed and variable factors of production. 
C) variable factors of production only. 
D) fixed factors of production only. 
E) the difference between fixed and variable factors of production. 
A) no factor of production. 
B) both fixed and variable factors of production. 
C) variable factors of production only. 
D) fixed factors of production only. 
E) the difference between fixed and variable factors of production.

Question 20

If the market wage increases,marginal cost shifts ____ and market supply ____.

Accepted Answer

A) upward; decreases 
B) downward; decreases 
C) upward; increases 
D) downward; increases 
E) upward and then downward; remains unchanged 
A) upward; decreases 
B) downward; decreases 
C) upward; increases 
D) downward; increases 
E) upward and then downward; remains unchanged

Exam 6: The Supply Curve and the Behavior of Firms

Where does producer surplus get its name? That is,why do economists call it a surplus?

A market that includes only a single firm is called a(n)

The approach based on the relationship between price and marginal cost brings about the same supply curve as what is implied by the approach based on profit maximization.

By definition,a profit-maximizing firm is a monopoly.

What is the profit-maximization rule? Explain why profit is maximized when the rule is met.

A firm is one of the terms for a business organization.

If marginal cost increases,then the market supply curve shifts to the left.

If the marginal cost curves of all the firms in an industry are horizontally summed,one obtains

In economics,firms are assumed to

All types of firms suffer from managerial conflicts.

Variable costs are those that

Exhibit 6-7 -Refer to Exhibit 6-7.If market price is $18,producer surplus for the profit-maximizing firm is

Marginal cost increases because

Partnerships differ from sole proprietorships because partnerships

Draw a graph of total revenue and total cost for a competitive firm that is maximizing profit but just breaking even.Mark the profit-maximizing output level.

Producer surplus is just an economist's technical name for profit.

Profit maximization is the basic assumption for all types of corporations,but not for sole proprietorships.

Total revenue is the price of a good times its quantity.

Production in the short run requires

If the market wage increases,marginal cost shifts ____ and market supply ____.

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

If the market wage increases,marginal cost shifts and market supply .