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80 units
60 units
40 units
20 units
46. The marginal products of hiring additional workers are
A
B
C
D
53. Which of the following statements is correct?
Marginal cost is rising for quantities higher than D because marginal cost is higher than average
total cost.
Average variable cost is declining for quantities less than B because marginal cost is lower than
average variable cost.
Marginal cost is minimized at B because at that quantity, marginal cost equals average variable
cost.
Average total cost is declining for quantities less than C because average variable cost is less than
average total cost.
54. The minimum points of the average variable cost and average total cost curves occur
where the
marginal cost curve lies below the average variable cost and average total cost curves.
marginal cost curve intersects those curves.
average variable cost and average total cost curves intersect.
slope of total cost is the smallest.
55. For this firm, the average revenue when 17 units are produced and sold is
$2.
$7.
$1.
$0.
56. For this firm, the marginal revenue of the 15th unit is
$1.
$2.
$7.
The marginal revenue cannot be determined without knowing the total revenue when 15 units
are sold.
57. Which of the following statements is correct?
For all firms, marginal revenue equals the price of the good.
Only for competitive firms does average revenue equal the price of the good.
Marginal revenue can be calculated as total revenue divided by the quantity sold.
Only for competitive firms does average revenue equal marginal revenue.
58. Suppose a firm in a competitive market produces and sells 150 units of output and
earns $1,800 in total revenue from the sales. If the firm increases its output to 200 units,
the average revenue of the 200th unit will be
less than $12.
more than $12.
$12.
zero.
59. Whenever a perfectly competitive firm chooses to change its level of output, its
marginal revenue
increases if MR < ATC and decreases if MR > ATC.
does not change.
always increases.
always decreases.
60. If a competitive firm is currently producing a level of output at which marginal cost exceeds
marginal revenue, then
a one-unit increase in output will increase the firm's profit.
a one-unit decrease in output will increase the firm's profit.
total revenue exceeds total cost.
total cost exceeds total revenue.
61. Ms. Joplin sells colored pencils. The colored-pencil industry is competitive. Ms. Joplin hires a
business consultant to analyze her company's financial records. The consultant recommends that
Ms. Joplin increase her production. The consultant must have concluded that, at her current level
of production, Ms. Joplin's
total revenues equal her total economic costs.
marginal revenue exceeds her total cost.
marginal revenue exceeds her marginal cost.
marginal cost exceeds her marginal revenue.
62. The accountants hired by Forever Fitness have determined total fixed cost to be $75,000, total
variable cost to be $130,000, and total revenue to be $125,000. Because of this information, in the
short run, Forever Fitness should
shut down because staying open would be more expensive.
lower their prices to increase their profits.
stay open because shutting down would be more expensive.
stay open because the firm is making an economic profit.
63. Raiman's Shoe Repair produces custom-made shoes. When Mr. Raiman produces 12 pairs per
week, the marginal cost of the 12th pair is $84, and the marginal revenue of the 12th pair is $70.
What would you advise Mr. Raiman to do?
Shut down the business
Produce more custom-made shoes
Decrease the price
Produce fewer custom-made shoes
64. The information below applies to a competitive firm that sells its output for $45 per unit.
• When the firm produces and sells 120 units of output, its average total cost is $23.5.
• When the firm produces and sells 121 units of output, its average total cost is $23.65.
When the firm produces 120 units of output, its total cost is
$5,400.00.
$1,064.25.
$2,820.00.
$2,838.00.
Incorrect
0/1 Points
66
The information below applies to a competitive firm that sells its output for $45 per unit.
• When the firm produces and sells 120 units of output, its average total cost is $23.5.
• When the firm produces and sells 121 units of output, its average total cost is $23.65.
When the firm produces 120 units of output, its profit is
$5,400.00.
$2,580.00.
$2,820.00.
$7,675.00.
Incorrect
0/1 Points
67
The information below applies to a competitive firm that sells its output for $45 per unit.
• When the firm produces and sells 120 units of output, its average total cost is $23.5.
• When the firm produces and sells 121 units of output, its average total cost is $23.65.
When the firm increases its output from 120 units to 121 units, its profit
decreases by $3.35.
decreases by $45.00.
increases by $45.00.
increases by $3.35.
Incorrect
0/1 Points
68
The firm's short-run supply curve is its marginal cost curve above
$2.
$4.
$6.
$13.
Correct
1/1 Points
69
The firm should shut down if the market price is
above $13.
above $6 but less than $13.
above $13 but less than $20.
less than $6.
Correct
1/1 Points
70
The firm will earn a negative economic profit but remain in business in the short run if the market
price is
above $13.
less than $13 but more than $6.
less than $6.
exactly $13.
Incorrect
0/1 Points
72
If the market price is $12, the firm will earn
P7 × Q5.
P7 × Q3.
(P7 − P5) × Q3.
We are unable to determine the firm's profits because the quantity that the firm would produce is
not labeled on the graph.
Correct
1/1 Points
74
In the short run, if the market price is higher than P4 but less than P6, individual firms in a
competitive industry will earn
positive profits.
zero profits.
losses but will remain in business.
losses and will shut down.
Incorrect
0/1 Points
75
Firms would be encouraged to enter this market for all prices that exceed
P1.
P2.
P3.
P4.
Incorrect
0/1 Points
76
When market price is P2, a profit-maximizing firm's losses can be represented by the area
P5 × Q3.
P4 × Q5.
(P5 − P3) × Q3.
(P5 − P4) × Q3.
Incorrect
0/1 Points
82
Profit can always be increased by increasing the level of output by one unit if the monopolist is
currently operating at
Q4 only.
Q1 or Q2 only.
Q5 only.
Q3, Q4, or Q5 only.
Correct
1/1 Points
83
A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of
output, its marginal revenue is $40, its average revenue is $80, and its average total cost is
$44. At Q = 500, the firm's profit is
$18,000.
$20,000.
$22,000.
$40,000.
Correct
1/1 Points
84
Based upon the information shown, what price will Bearclaws charge to maximize profits?
$7
$10.50
$14
$12
Correct
1/1 Points
85
Based upon the information shown, how many units will Bearclaws produce to maximize profits?
70
90
105
130
Incorrect
0/1 Points
86
Based upon the information shown, what is total revenue for Bearclaws, given that it maximizes
profits?
$900.
$980.
$490.
$1,080.
Option 2
Correct
1/1 Points
87
The deadweight loss associated with a monopoly occurs because the monopolist
maximizes profits.
produces an output level less than the socially optimal level.
produces an output level greater than the socially optimal level.
equates marginal revenue with marginal cost.
Correct
1/1 Points
88
What is the socially efficient price and quantity?
Price = X; quantity = J
Price = Y; quantity = K
Price = Y; quantity = J
Price = Z; quantity = K
Incorrect
0/1 Points
89
What is the monopoly price and quantity?
Price = X; quantity = J
Price = Y; quantity = K
Price = Y; quantity = J
Price = Z; quantity = J
Incorrect
0/1 Points
90
What is the area of deadweight loss?
The rectangle (X − Z) × J
The triangle 1/2[(X − Z) × (K − J)]
The triangle 1/2[(X − Y) × (K − J)]
The rectangle (X − Z) × J plus the triangle 1/2[(X − Z) × (K − J)]
Correct
1/1 Points
91
The two types of imperfectly competitive markets are
monopoly and monopolistic competition.
monopoly and oligopoly.
monopolistic competition and oligopoly.
monopolistic competition and cartels.
Correct
1/1 Points
92
A monopolistically competitive industry is characterized by
many firms, differentiated products, and barriers to entry.
many firms, differentiated products, and free entry.
a few firms, identical products, and free entry.
a few firms, differentiated products, and barriers to entry.
Correct
1/1 Points
93
For a monopolistically competitive firm,
marginal revenue and price are the same.
at the profit-maximizing quantity of output, marginal revenue equals marginal cost.
at the profit-maximizing quantity of output, price equals marginal cost.
at the profit-maximizing quantity of output, price equals the minimum of average total cost.
Correct
1/1 Points
94
In the short run, a firm operating in a monopolistically competitive market
produces an output level where marginal revenue equals average total cost.
produces an output where marginal revenue equals marginal cost, and the price is determined by
demand.
must earn zero economic profits.
maximizes revenues as well as profits.
Incorrect
0/1 Points
95
Which of the following conditions is characteristic of a monopolistically competitive firm in both
the short run and the long run?
P > MC
MC = ATC
P < MR
P = ATC
Incorrect
0/1 Points
96
Which of the graphs depicts a short-run equilibrium that will encourage the
entry of other firms into this monopolistically competitive industry?
Graph (a)
Graph (b)
Graph (c)
Graph (d)
Incorrect
0/1 Points
97
Graph (b) is consistent with a firm in a monopolistically competitive market that is
$70
$60
$90
$80
Incorrect
0/1 Points
99
How much consumer surplus will be derived from the purchase of this product at the
monopolistically competitive price?
$200
$400
$1,600
$600
Correct
1/1 Points
100
How much profit will the monopolistically competitive firm earn in this situation?
$0
$1,600
$200
$400
Incorrect
0/1 Points
101
How much output will the monopolistically competitive firm produce in this situation?
20 units
10 units
40 units
90 units
Correct
1/1 Points
102
Assuming the firm is maximizing profit, this firm is operating
in the short run and earning a positive economic profit.
in the short run and breaking even.
in the long run and earning a positive economic profit.
in the long run and incurring and economic loss.