Question 1

A total cost function will

Accepted Answer

A) Never slope up. 
B) Never flatten. 
C) Never steepen. 
D) Never slope down. 
A) Never slope up. 
B) Never flatten. 
C) Never steepen. 
D) Never slope down. D

Question 2

Costs which do not increase with an increase in output are called

Accepted Answer

A) fixed costs. 
B) changeable costs. 
C) variable costs. 
D) unchangeable costs. 
A) fixed costs. 
B) changeable costs. 
C) variable costs. 
D) unchangeable costs. A

Question 3

Suppose the market price for a price taking firm is known to be $2, the total revenue accruing to it if it sells 100 is ____ and the total revenue accruing to it if it sells 200 is ____.

Accepted Answer

A) $2, $2 
B) $100, $200 
C) $200, $200 
D) $200, $400 
A) $2, $2 
B) $100, $200 
C) $200, $200 
D) $200, $400 D

Question 4

-Refer to Table 4.2, Box A should be filled with

Accepted Answer

A) $0. 
B) $10. 
C) $20. 
D) nothing. 
A) $0. 
B) $10. 
C) $20. 
D) nothing.

Question 5

The average product of labor is

Accepted Answer

A) The change in output that results from an increase of labor by one unit. 
B) Total output divided by total labor. 
C) The percentage change in output divided by the percentage change in labor. 
D) The output produced by a worker of average quality. 
A) The change in output that results from an increase of labor by one unit. 
B) Total output divided by total labor. 
C) The percentage change in output divided by the percentage change in labor. 
D) The output produced by a worker of average quality.

Question 6

Marginal Cost is

Accepted Answer

A) the addition to cost associated with one additional unit of output. 
B) the per unit cost of production. 
C) the per unit variable cost of production. 
D) the per unit fixed cost of production. 
A) the addition to cost associated with one additional unit of output. 
B) the per unit cost of production. 
C) the per unit variable cost of production. 
D) the per unit fixed cost of production.

Question 7

If the demand curve for a firm's output is P=200-10Q, the marginal revenue curve will be

Accepted Answer

A) MR=200-20Q 
B) MR=200-5Q 
C) MR=20-Q 
D) MR=P* 
A) MR=200-20Q 
B) MR=200-5Q 
C) MR=20-Q 
D) MR=P*

Question 8

-Refer to Table 4.2, Box Q should be filled with

Accepted Answer

A) $00. 
B) $7.50. 
C) $12.50. 
D) $2 
A) $00. 
B) $7.50. 
C) $12.50. 
D) $2

Question 9

If a firm's average total cost is always a constant, its marginal cost is

Accepted Answer

A) greater than its average total cost. 
B) less than its average total cost. 
C) equal to its average total cost. 
D) decreasing 
A) greater than its average total cost. 
B) less than its average total cost. 
C) equal to its average total cost. 
D) decreasing

Question 10

If you know that the price where MC=MR at a point that is between ATC and AVC, you

Accepted Answer

A) Need to know whether the firm is a price taker or a price maker to determine whether they are making a profit. 
B) Know the firm is making a profit. 
C) Know the firm is making a loss. 
D) Know the firm is breaking even. 
A) Need to know whether the firm is a price taker or a price maker to determine whether they are making a profit. 
B) Know the firm is making a profit. 
C) Know the firm is making a loss. 
D) Know the firm is breaking even.

Question 11

-Refer to Table 4.1, Box H should be filled with

Accepted Answer

A) $0. 
B) $110. 
C) $125. 
D) $150. 
A) $0. 
B) $110. 
C) $125. 
D) $150.

Question 12

When a firm shuts down because the market price of its product is less than the average variable cost of producing that product, the shut-down decision is

Accepted Answer

A) made for the long run. 
B) made only for the short run. 
C) followed by declaration of bankruptcy. 
D) made just before it sells all of its fixed assets. 
A) made for the long run. 
B) made only for the short run. 
C) followed by declaration of bankruptcy. 
D) made just before it sells all of its fixed assets.

Question 13

-Refer to Figure 4.1, the increase in output from point B to C is greater than the increase in output from point C to D because

Accepted Answer

A) more workers always produce more. 
B) better workers are usually hired after the earlier ones. 
C) a small number of workers cannot take as good advantage of the division of labor as a larger number. 
D) eventually workers are up against the fact that there are fixed inputs and more workers do not add as much. 
A) more workers always produce more. 
B) better workers are usually hired after the earlier ones. 
C) a small number of workers cannot take as good advantage of the division of labor as a larger number. 
D) eventually workers are up against the fact that there are fixed inputs and more workers do not add as much.

Question 14

If the demand curve for a firm's output is P=100-2Q, the marginal revenue curve will be

Accepted Answer

A) MR-100-2Q 
B) MR=50-Q 
C) MR=100-4Q 
D) MR*=P* 
A) MR-100-2Q 
B) MR=50-Q 
C) MR=100-4Q 
D) MR*=P*

Question 15

A decrease in the demand for a good that is produced by many firms will

Accepted Answer

A) increase all of their respective marginal cost curves. 
B) increase all of their respective marginal revenue curves. 
C) decrease all of their respective marginal cost curves. 
D) decrease all of their respective marginal revenue curves. 
A) increase all of their respective marginal cost curves. 
B) increase all of their respective marginal revenue curves. 
C) decrease all of their respective marginal cost curves. 
D) decrease all of their respective marginal revenue curves.

Question 16

-Refer to Figure 4.1, the increase in output from point A to B is less than the increase in output from point B to C because

Accepted Answer

A) more workers always produce more. 
B) better workers are usually hired after the earlier ones . 
C) a small number of workers cannot take as good advantage of the division of labor as a larger number. 
D) eventually workers are up against the fact that there are fixed inputs and more workers do not add as much. 
A) more workers always produce more. 
B) better workers are usually hired after the earlier ones . 
C) a small number of workers cannot take as good advantage of the division of labor as a larger number. 
D) eventually workers are up against the fact that there are fixed inputs and more workers do not add as much.

Question 17

If the price is greater than the average variable cost the firm should produce

Accepted Answer

A) Zero 
B) Where MC=MR 
C) Where ATC is minimized 
D) Where AVC is minimized 
A) Zero 
B) Where MC=MR 
C) Where ATC is minimized 
D) Where AVC is minimized

Question 18

Suppose a firm is a price taker, the demand for that firm's product is

Accepted Answer

A) is flat line at the market price. 
B) a downward sloping line with the negative of the market price as its slope. 
C) an upward sloping line with the market price as the slope. 
D) parabolic. 
A) is flat line at the market price. 
B) a downward sloping line with the negative of the market price as its slope. 
C) an upward sloping line with the market price as the slope. 
D) parabolic.

Question 19

A production function will begin

Accepted Answer

A) at the origin. 
B) on the vertical axis. 
C) on the horizontal axis. 
D) in the middle of the diagram (at a positive L and positive output). 
A) at the origin. 
B) on the vertical axis. 
C) on the horizontal axis. 
D) in the middle of the diagram (at a positive L and positive output).

Question 20

If the demand curve for a firm's output is P=100-Q, the total revenue curve will be

Accepted Answer

A) TR=100-2Q 
B) TR=100Q-Q2 
C) TR=100Q-2Q2 
D) TR=P*Q 
A) TR=100-2Q 
B) TR=100Q-Q2 
C) TR=100Q-2Q2 
D) TR=P*Q

Exam 4: Firm Production, Cost, and Revenue

A total cost function will

Costs which do not increase with an increase in output are called

Suppose the market price for a price taking firm is known to be $2, the total revenue accruing to it if it sells 100 is ____ and the total revenue accruing to it if it sells 200 is ____.

-Refer to Table 4.2, Box A should be filled with

The average product of labor is

Marginal Cost is

If the demand curve for a firm's output is P=200-10Q, the marginal revenue curve will be

-Refer to Table 4.2, Box Q should be filled with

If a firm's average total cost is always a constant, its marginal cost is

If you know that the price where MC=MR at a point that is between ATC and AVC, you

-Refer to Table 4.1, Box H should be filled with

When a firm shuts down because the market price of its product is less than the average variable cost of producing that product, the shut-down decision is

-Refer to Figure 4.1, the increase in output from point B to C is greater than the increase in output from point C to D because

If the demand curve for a firm's output is P=100-2Q, the marginal revenue curve will be

A decrease in the demand for a good that is produced by many firms will

-Refer to Figure 4.1, the increase in output from point A to B is less than the increase in output from point B to C because

If the price is greater than the average variable cost the firm should produce

Suppose a firm is a price taker, the demand for that firm's product is

A production function will begin

If the demand curve for a firm's output is P=100-Q, the total revenue curve will be

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Suppose the market price for a price taking firm is known to be $2, the total revenue accruing to it if it sells 100 is and the total revenue accruing to it if it sells 200 is .