Question 1

If the firm has no competitors, the marginal revenue curve is

Accepted Answer

A) flat (horizontal). 
B) vertical. 
C) upward sloping. 
D) downward sloping. 
A) flat (horizontal). 
B) vertical. 
C) upward sloping. 
D) downward sloping.

Question 2

When a firm shuts down because the market price of its product is less than its average variable cost of producing that product, it suffers a loss equal to

Accepted Answer

A) its total revenue. 
B) its total variable cost. 
C) its total fixed cost. 
D) all of the options are correct. 
A) its total revenue. 
B) its total variable cost. 
C) its total fixed cost. 
D) all of the options are correct.

Question 3

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

Accepted Answer

A) $6.00. 
B) $8.00. 
C) $12.50. 
D) $30. 
A) $6.00. 
B) $8.00. 
C) $12.50. 
D) $30.

Question 4

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

Accepted Answer

A) $0. 
B) $10. 
C) $100. 
D) $200. 
A) $0. 
B) $10. 
C) $100. 
D) $200.

Question 5

Which of the following is true

Accepted Answer

A) the average total cost curve is U-shaped. 
B) the average variable cost curve is U-shaped. 
C) neither option is correct 
D) both options are correct 
A) the average total cost curve is U-shaped. 
B) the average variable cost curve is U-shaped. 
C) neither option is correct 
D) both options are correct

Question 6

The marginal 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 7

A total cost function will start

Accepted Answer

A) At the origin if there are no fixed costs. 
B) On the vertical axis if there are no fixed costs. 
C) At the origin if there are fixed costs. 
D) On the horizontal axis. 
A) At the origin if there are no fixed costs. 
B) On the vertical axis if there are no fixed costs. 
C) At the origin if there are fixed costs. 
D) On the horizontal axis.

Question 8

Whether marginal revenue is constant or decreasing depends on

Accepted Answer

A) whether the firm is benefiting from the division of labor. 
B) whether the firm is dealing with diminishing returns. 
C) how much the firm sells. 
D) whether the firm faces competition. 
A) whether the firm is benefiting from the division of labor. 
B) whether the firm is dealing with diminishing returns. 
C) how much the firm sells. 
D) whether the firm faces competition.

Question 9

Given the production function and total cost function shown in Chapter 4, as production increases, total variable costs

Accepted Answer

A) decrease constantly. 
B) decrease for a while and then increase. 
C) increase constantly. 
D) increase for a while and then decrease. 
A) decrease constantly. 
B) decrease for a while and then increase. 
C) increase constantly. 
D) increase for a while and then decrease.

Question 10

Suppose you have a firm in which the owner pays $10,000 per month on rent of the plant and equipment and will pay that regardless of much output they produce, and once they get going they need $10 in materials and $20 in labor for everyone they produce,

Accepted Answer

A) Their variable costs are $10,000 plus $10 per unit. 
B) Their fixed costs are $10,000 and variable costs are $20 per unit. 
C) Their fixed costs are $10,000 and variable costs are $30 per unit. 
D) Their fixed costs are $10,000 and $10 per unit. 
A) Their variable costs are $10,000 plus $10 per unit. 
B) Their fixed costs are $10,000 and variable costs are $20 per unit. 
C) Their fixed costs are $10,000 and variable costs are $30 per unit. 
D) Their fixed costs are $10,000 and $10 per unit.

Question 11

If MC>MR the firm should produce

Accepted Answer

A) At this quantity. 
B) Fewer than this quantity. 
C) More than this quantity. 
D) Zero. 
A) At this quantity. 
B) Fewer than this quantity. 
C) More than this quantity. 
D) Zero.

Question 12

If a firm's average total cost is at its minimum possible value, its marginal cost is

Accepted Answer

A) constant. 
B) equal to its average total cost. 
C) decreasing. 
D) not U-shaped. 
A) constant. 
B) equal to its average total cost. 
C) decreasing. 
D) not U-shaped.

Question 13

When the firm is a price maker, at the quantity where profit is maximized

Accepted Answer

A) MC>P>MR B) MCP>MR B) MC

Question 14

Suppose you are deciding whether or not to increase production. You are currently making a profit. If you produce one more unit your increase in cost will be $10, your average variable costs will increase to less than that and your average fixed costs will decrease. Finally, your average revenue will increase to $12, but your increase in revenue will be $11. You should

Accepted Answer

A) Increase production by at least 1 unit. 
B) Increase production by exactly 1 unit. 
C) Leave production unchanged, profit is maximized where you are. 
D) Redo the math associated with decreasing production because that may result in greater profit. 
A) Increase production by at least 1 unit. 
B) Increase production by exactly 1 unit. 
C) Leave production unchanged, profit is maximized where you are. 
D) Redo the math associated with decreasing production because that may result in greater profit.

Question 15

AFC is the same as

Accepted Answer

A) ATC 
B) AVC 
C) MC 
D) ATC-AVC 
A) ATC 
B) AVC 
C) MC 
D) ATC-AVC

Question 16

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

Accepted Answer

A) $0. 
B) $10. 
C) $20. 
D) $30. 
A) $0. 
B) $10. 
C) $20. 
D) $30.

Question 17

When firms add workers and get more efficient they are benefiting from

Accepted Answer

A) the division of labor. 
B) the law of large numbers. 
C) diminishing returns. 
D) diminishing marginal utility. 
A) the division of labor. 
B) the law of large numbers. 
C) diminishing returns. 
D) diminishing marginal utility.

Question 18

Suppose you are deciding whether or not to increase production. If you produce one more unit your increase in cost will be $10, your average variable costs will increase to $9.50 and your average fixed costs will decrease. Finally, price you are able to charge will be $9. You should

Accepted Answer

A) Increase production by at least 1 unit. 
B) Increase production by exactly 1 unit. 
C) Leave production unchanged, profit is maximized where you are. 
D) Shut down 
A) Increase production by at least 1 unit. 
B) Increase production by exactly 1 unit. 
C) Leave production unchanged, profit is maximized where you are. 
D) Shut down

Question 19

Suppose you are deciding whether or not to increase production. You are currently making a profit. If you produce one more unit your increase in cost will be $10, your average variable costs will increase to less than that and your average fixed costs will decrease. Finally, your average revenue will increase to $10, but your increase in revenue will be $9. You should

Accepted Answer

A) Increase production by at least 1 unit. 
B) Increase production by exactly 1 unit. 
C) Leave production unchanged, profit is maximized where you are. 
D) Redo the math associated with decreasing production because that may result in greater profit. 
A) Increase production by at least 1 unit. 
B) Increase production by exactly 1 unit. 
C) Leave production unchanged, profit is maximized where you are. 
D) Redo the math associated with decreasing production because that may result in greater profit.

Question 20

-In Figure 4.2 , the reason that point D is higher than point C and C is higher than B is that

Accepted Answer

A) it always costs more money to increase output. 
B) small levels of production are often inefficient and that significant increases in production can occur thereafter at only a small additional cost. 
C) it is very difficult and very expensive to increase output once the capacity of the machinery has been reached. 
D) there is waste. 
A) it always costs more money to increase output. 
B) small levels of production are often inefficient and that significant increases in production can occur thereafter at only a small additional cost. 
C) it is very difficult and very expensive to increase output once the capacity of the machinery has been reached. 
D) there is waste.

Exam 4: Firm Production, Cost, and Revenue

If the firm has no competitors, the marginal revenue curve is

When a firm shuts down because the market price of its product is less than its average variable cost of producing that product, it suffers a loss equal to

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

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

Which of the following is true

The marginal product of labor is

A total cost function will start

Whether marginal revenue is constant or decreasing depends on

Given the production function and total cost function shown in Chapter 4, as production increases, total variable costs

Suppose you have a firm in which the owner pays $10,000 per month on rent of the plant and equipment and will pay that regardless of much output they produce, and once they get going they need $10 in materials and $20 in labor for everyone they produce,

If MC>MR the firm should produce

If a firm's average total cost is at its minimum possible value, its marginal cost is

When the firm is a price maker, at the quantity where profit is maximized

AFC is the same as

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

When firms add workers and get more efficient they are benefiting from

Suppose you are deciding whether or not to increase production. If you produce one more unit your increase in cost will be $10, your average variable costs will increase to $9.50 and your average fixed costs will decrease. Finally, price you are able to charge will be $9. You should

-In Figure 4.2 , the reason that point D is higher than point C and C is higher than B is that

Economics: the Study of Opportunity Cost

Supply and Demand

The Concept of Elasticity and Consumer and Producer Surplus

Perfect Competition, Monopoly, and Economic Versus Normal Profit

Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, Depression

Interest Rates and Present Value

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Policy

Federal Spending

Federal Deficits, Surpluses, and the National Debt

The Housing Bubble

The Recession of 2007-2009: Causes and Policy Responses

Is Economic Stagnation the New Normal

Is the Fiscalsky Falling: An Examination of Unfunded Social Security, Medicare, and State and Local Pension Liabilities

International Trade: Does It Jeopardize American Jobs

International Finance and Exchange Rates

The European Debt Crisis

Economic Growth and Development

Nafta, Gatt, Wto: Are Trade Agreements Good for Us

The Line Between Legal and Illegal Goods

Natural Resources, the Environment, and Climate Change

Health Care

Government-Provided Health Insurance: Medicaid, Medicare, and the Child Health Insurance Program

The Economics of Prescription Drugs

So You Want to Be a Lawyer: Economics and the Law

The Economics of Crime

Antitrust

The Economics of Race and Discrimination

Income and Wealth Inequality

Farm Policy

Minimum Wage

Ticket Brokers and Ticket Scalping

Rent Control

Economics of K-12 Education

Economics of College and University Education

Poverty and Welfare

Head Start

Social Security

Personal Income Taxes

Energy Prices

If We Build It, Will They Come and Other Sports Questions

The Stock Market Crashes

Unions

Walmart: Always Low Prices and Low Wages- Always

The Economic Impact of Casino Gambling

The Economics of Terrorism

Filters