Question 1

In the derivation of MC, to find its minimum you need

Accepted Answer

A) The minimum-slope ray out of the origin to the TC 
B) The minimum-slope ray out of the origin to the ATC 
C) The minimum-slope ray out of the origin to the TVC 
D) The flattest slope on the TC. 
A) The minimum-slope ray out of the origin to the TC 
B) The minimum-slope ray out of the origin to the ATC 
C) The minimum-slope ray out of the origin to the TVC 
D) The flattest slope on the TC.

Question 2

The Total Cost Function in the book

Accepted Answer

A) is an up-ward sloping straight line. 
B) is U-shaped. 
C) is shaped as an upside down U. 
D) begins by sharply rising, flattens out then sharply rises again. 
A) is an up-ward sloping straight line. 
B) is U-shaped. 
C) is shaped as an upside down U. 
D) begins by sharply rising, flattens out then sharply rises again.

Question 3

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

Accepted Answer

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

Question 4

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

Accepted Answer

A) The loss the firm makes from shutting down (its TF
C) is less than the loss they make as a result of producing. 
B) The loss the firm makes from shutting down (its TF
C) is greater than the loss they make as a result of producing. 
C) Where MC=MR. 
D) Where AVC is minimized. 
A) The loss the firm makes from shutting down (its TF
C) is less than the loss they make as a result of producing. 
B) The loss the firm makes from shutting down (its TF
C) is greater than the loss they make as a result of producing. 
C) Where MC=MR. 
D) Where AVC is minimized.

Question 5

-In Figure 4.2, the reason that the increase in output from point B to C is much greater than the increase in output from point C to D 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.

Question 6

In order to be drawn correctly the minimum of the AVC is

Accepted Answer

A) To the left and up from the minimum of the MC. 
B) To the left and down from the minimum of the ATC. 
C) To the left and up of the minimum of the ATC. 
D) Vertically straight down from the minimum of the ATC (neither to the right nor left). 
A) To the left and up from the minimum of the MC. 
B) To the left and down from the minimum of the ATC. 
C) To the left and up of the minimum of the ATC. 
D) Vertically straight down from the minimum of the ATC (neither to the right nor left).

Question 7

If the market price for a good produced by a price taking firm is $5, the firm's total revenue is

Accepted Answer

A) a flat line at P=$5. 
B) parabolic. 
C) downward sloping. 
D) an upward sloping line beginning at the origin and having a slope of 5. 
A) a flat line at P=$5. 
B) parabolic. 
C) downward sloping. 
D) an upward sloping line beginning at the origin and having a slope of 5.

Question 8

The assumption we usually make about all firms is that they wish to

Accepted Answer

A) maximize market share. 
B) minimize costs. 
C) maximize sales. 
D) maximize profits. 
A) maximize market share. 
B) minimize costs. 
C) maximize sales. 
D) maximize profits.

Question 9

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

Accepted Answer

A) $0. 
B) $10. 
C) $30. 
D) $40. 
A) $0. 
B) $10. 
C) $30. 
D) $40.

Question 10

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

Accepted Answer

A) $0. 
B) $110. 
C) $115. 
D) $125. 
A) $0. 
B) $110. 
C) $115. 
D) $125.

Question 11

If MR=MC and P>AVC 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

A total cost function will start

Accepted Answer

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

Question 13

The shape of the firm's marginal revenue curve depends ultimately on whether the firm is

Accepted Answer

A) a monopolist or a perfect competitor. 
B) a revenue maximizer or a profit maximizer. 
C) a market share maximizer or a sales maximizer. 
D) owned by a man or a woman. 
A) a monopolist or a perfect competitor. 
B) a revenue maximizer or a profit maximizer. 
C) a market share maximizer or a sales maximizer. 
D) owned by a man or a woman.

Question 14

The shutdown condition for a firm is to

Accepted Answer

A) shutdown if losses are made. 
B) shutdown if price is less than Average Total Cost. 
C) shutdown if price is less than marginal revenue. 
D) shutdown if price is less than Average Variable Cost. 
A) shutdown if losses are made. 
B) shutdown if price is less than Average Total Cost. 
C) shutdown if price is less than marginal revenue. 
D) shutdown if price is less than Average Variable Cost.

Question 15

In order to be drawn correctly the minimum of the ATC is

Accepted Answer

A) To the right and up from the minimum of the MC. 
B) To the right and down of the minimum of the AVC. 
C) To the left and down of the minimum of the AVC. 
D) Vertically straight up from the minimum of the AVC (neither to the right nor left). 
A) To the right and up from the minimum of the MC. 
B) To the right and down of the minimum of the AVC. 
C) To the left and down of the minimum of the AVC. 
D) Vertically straight up from the minimum of the AVC (neither to the right nor left).

Question 16

Marginal Revenue is

Accepted Answer

A) the extra revenue associated with one additional unit of sales. 
B) the extra cost associated with one additional unit of output. 
C) the revenue associated with the first unit of sales. 
D) the revenue associated with the sale of the average unit. 
A) the extra revenue associated with one additional unit of sales. 
B) the extra cost associated with one additional unit of output. 
C) the revenue associated with the first unit of sales. 
D) the revenue associated with the sale of the average unit.

Question 17

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

Accepted Answer

A) $0. 
B) $115. 
C) $150. 
D) $200. 
A) $0. 
B) $115. 
C) $150. 
D) $200.

Question 18

Average Fixed 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.

Exam 4: Firm Production, Cost, and Revenue

In the derivation of MC, to find its minimum you need

The Total Cost Function in the book

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

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

-In Figure 4.2, the reason that the increase in output from point B to C is much greater than the increase in output from point C to D is that

In order to be drawn correctly the minimum of the AVC is

If the market price for a good produced by a price taking firm is $5, the firm's total revenue is

The assumption we usually make about all firms is that they wish to

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

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

If MR=MC and P>AVC the firm should produce

A total cost function will start

The shape of the firm's marginal revenue curve depends ultimately on whether the firm is

The shutdown condition for a firm is to

In order to be drawn correctly the minimum of the ATC is

Marginal Revenue is

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

Average Fixed Cost is

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

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The Stock Market Crashes

Unions

Walmart: Always Low Prices and Low Wages- Always

The Economic Impact of Casino Gambling

The Economics of Terrorism

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