Question 1

Exhibit 6-7  
-Refer to Exhibit 6-7.If market price increases from $18 to $20,then producer surplus for the profit-maximizing firm

Accepted Answer

A) increases by $2. 
B) decreases by $2. 
C) increases by $7. 
D) decreases by $1. 
E) does not change. 
A) increases by $2. 
B) decreases by $2. 
C) increases by $7. 
D) decreases by $1. 
E) does not change.

Question 2

For a single competitive firm,marginal revenue is equivalent to

Accepted Answer

A) marginal product. 
B) marginal cost. 
C) total revenue. 
D) output price. 
E) the sum of all input prices. 
A) marginal product. 
B) marginal cost. 
C) total revenue. 
D) output price. 
E) the sum of all input prices.

Question 3

The slope of the production function turns from positive to negative when the marginal product of labor turns from positive to negative.

Accepted Answer

A) True 
 B)False

Question 4

In moving down along a demand curve,total revenue

Accepted Answer

A) stays constant. 
B) increases. 
C) may increase,decrease,or stay constant. 
D) decreases. 
E) is always equal to zero. 
A) stays constant. 
B) increases. 
C) may increase,decrease,or stay constant. 
D) decreases. 
E) is always equal to zero.

Question 5

If a firm leaves an industry,all else held equal,the market supply curve shifts left.

Accepted Answer

A) True 
 B)False

Question 6

Marginal product decreases as labor increases because marginal cost is rising.

Accepted Answer

A) True 
 B)False

Question 7

Stock shares are issued by

Accepted Answer

A) sole proprietorships. 
B) partnerships. 
C) corporations. 
D) nonprofit firms. 
E) government enterprises. 
A) sole proprietorships. 
B) partnerships. 
C) corporations. 
D) nonprofit firms. 
E) government enterprises.

Question 8

If total revenue is less than total costs,then

Accepted Answer

A) economic profits are positive. 
B) economic profits are zero. 
C) economic profits are negative. 
D) a firm breaks even. 
E) profits can be positive or negative,depending on other factors. 
A) economic profits are positive. 
B) economic profits are zero. 
C) economic profits are negative. 
D) a firm breaks even. 
E) profits can be positive or negative,depending on other factors.

Question 9

Compute the total revenue,total costs,and profits when the price of a crate of grapes is $80.How many crates of grapes will maximize profits? How does the answer compare to the price equals marginal cost condition?

Accepted Answer

In this example,profit is being maximize

Question 10

Which of the following is true for a profit-maximizing firm in a competitive market?

Accepted Answer

A) Marginal cost is greater than marginal revenue and price. 
B) Marginal cost is greater than marginal revenue but less than price. 
C) Marginal cost is less than marginal revenue but higher than price. 
D) Marginal cost equals price but is less than marginal revenue. 
E) Marginal cost equals marginal revenue and price. 
A) Marginal cost is greater than marginal revenue and price. 
B) Marginal cost is greater than marginal revenue but less than price. 
C) Marginal cost is less than marginal revenue but higher than price. 
D) Marginal cost equals price but is less than marginal revenue. 
E) Marginal cost equals marginal revenue and price.

Question 11

Define diminishing returns in production and illustrate it with the graph of a production function.

Accepted Answer

Diminishing returns occur when an additi

Question 12

The difference between producer surplus and economic profit is

Accepted Answer

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

Question 13

Explain what happens to market supply when a new firm enters a market,holding everything else equal.

Accepted Answer

The market supply is the horizontal summ

Question 14

When production increases,total costs

Accepted Answer

A) can increase or decrease in the long run. 
B) always increase in the short run. 
C) are constant in the long run. 
D) can increase or decrease in the short run. 
E) become zero. 
A) can increase or decrease in the long run. 
B) always increase in the short run. 
C) are constant in the long run. 
D) can increase or decrease in the short run. 
E) become zero.

Question 15

Exhibit 6-4  
-Refer to Exhibit 6-4.If output price is $14,the profit-maximizing output level is ____ units.

Accepted Answer

A) 2 
B) 5 
C) 3 
D) 4 
E) 6 
A) 2 
B) 5 
C) 3 
D) 4 
E) 6

Question 16

A price-taking firm is one that forces consumers to take whatever price the firm wishes.

Accepted Answer

A) True 
 B)False

Question 17

A production function is a straight line because of diminishing returns to labor.

Accepted Answer

A) True 
 B)False

Question 18

To maximize profits,a competitive firm increases its output as long as

Accepted Answer

A) total revenue is greater than total cost. 
B) total revenue is less than total cost. 
C) marginal revenue is less than marginal cost. 
D) marginal revenue is greater than marginal cost. 
E) marginal revenue is positive. 
A) total revenue is greater than total cost. 
B) total revenue is less than total cost. 
C) marginal revenue is less than marginal cost. 
D) marginal revenue is greater than marginal cost. 
E) marginal revenue is positive.

Question 19

In contrast with a firm in a competitive market,a monopoly is able to control

Accepted Answer

A) input costs. 
B) price. 
C) profits. 
D) demand. 
E) all aspects of its operation. 
A) input costs. 
B) price. 
C) profits. 
D) demand. 
E) all aspects of its operation.

Question 20

The reason for increasing marginal cost is the diminishing marginal product of labor.

Accepted Answer

A) True 
 B)False

Exam 6: The Supply Curve and the Behavior of Firms

Exhibit 6-7 -Refer to Exhibit 6-7.If market price increases from $18 to $20,then producer surplus for the profit-maximizing firm

For a single competitive firm,marginal revenue is equivalent to

The slope of the production function turns from positive to negative when the marginal product of labor turns from positive to negative.

In moving down along a demand curve,total revenue

If a firm leaves an industry,all else held equal,the market supply curve shifts left.

Marginal product decreases as labor increases because marginal cost is rising.

Stock shares are issued by

If total revenue is less than total costs,then

Compute the total revenue,total costs,and profits when the price of a crate of grapes is $80.How many crates of grapes will maximize profits? How does the answer compare to the price equals marginal cost condition?

Which of the following is true for a profit-maximizing firm in a competitive market?

Define diminishing returns in production and illustrate it with the graph of a production function.

The difference between producer surplus and economic profit is

Explain what happens to market supply when a new firm enters a market,holding everything else equal.

When production increases,total costs

Exhibit 6-4 -Refer to Exhibit 6-4.If output price is $14,the profit-maximizing output level is ____ units.

A price-taking firm is one that forces consumers to take whatever price the firm wishes.

A production function is a straight line because of diminishing returns to labor.

To maximize profits,a competitive firm increases its output as long as

In contrast with a firm in a competitive market,a monopoly is able to control

The reason for increasing marginal cost is the diminishing marginal product of labor.

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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