Question 1

Profit is usually ____ producer surplus for a firm.

Accepted Answer

A)  less than
B)  double
C)  greater than
D)  half of
E)  the same as

Question 2

For a competitive firm, which of the following is false?

Accepted Answer

A)  Marginal cost is constant as output changes.
B)  Marginal revenue equals price.
C)  Profit is maximized when price equals marginal cost.
D)  Profit is maximized when marginal revenue equals marginal cost.
E)  Producer surplus is zero.

Question 3

The curve that indicates how much output a profit-maximizing competitive firm will produce at any given price is the

Accepted Answer

A)  marginal revenue curve.
B)  total revenue curve.
C)  marginal cost curve.
D)  total cost curve.
E)  fixed cost curve.

Question 4

A cost curve shows the amount of output for any given amount of input.

Accepted Answer

A) True 
 B)False

Question 5

Marginal cost begins to increase when

Accepted Answer

A)  total cost falls.
B)  total product falls.
C)  diminishing returns begin.
D)  diminishing returns end.
E)  variable inputs are no longer used.

Question 6

In economics, the main objective of a firm is to maximize customer satisfaction.

Accepted Answer

A) True 
 B)False

Question 7

Exhibit 6-8 
-Refer to Exhibit 6-8. Total revenue in the market is illustrated by area

Accepted Answer

A)  B.
B)  B + C.
C)  A.
D)  A + B.
E)  C.

Question 8

Exhibit 6-5 4, A) total revenue is equal to zero. B) marginal revenue is negative. C) total profit is equal to zero. D) total profit is negative. E) both marginal profit and marginal cost are negative." class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 6-5. At Q4,

Accepted Answer

A)  total revenue is equal to zero.
B)  marginal revenue is negative.
C)  total profit is equal to zero.
D)  total profit is negative.
E)  both marginal profit and marginal cost are negative.

Question 9

All types of firms suffer from managerial conflicts.

Accepted Answer

A) True 
 B)False

Question 10

If price is greater than marginal cost and output is infinitely divisible, then

Accepted Answer

A)  decreasing output decreases revenue less than it decreases cost.
B)  increasing output increases revenue more than it increases cost.
C)  increasing output increases revenue less than it increases cost.
D)  decreasing output increases revenue more than it increases cost.
E)  increasing output has no effect on revenue and cost.

Question 11

Marginal cost increases because

Accepted Answer

A)  marginal product decreases.
B)  the price of labor decreases.
C)  marginal product increases.
D)  the price of labor increases.
E)  marginal product is constant.

Question 12

Revenue is the only factor that affects profits.

Accepted Answer

A) True 
 B)False

Question 13

A monopoly is a price-maker.

Accepted Answer

A) True 
 B)False

Question 14

The term diminishing returns to labor means that

Accepted Answer

A)  the wage rate falls as a person takes on more jobs.
B)  total output decreases as one more unit of labor is applied to production.
C)  the market value of labor decreases as more labor is supplied.
D)  increases in output decline as additional units of labor are used in production.
E)  the production of labor is becoming less profitable with decreasing real wages.

Question 15

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 16

The market supply curve tends to get steeper as output increases.

Accepted Answer

A) True 
 B)False

Question 17

Exhibit 6-6 
-The market supply curve is obtained by summing

Accepted Answer

A)  quantities produced by all firms at different prices.
B)  total profits made by all firms at different quantities of output.
C)  quantities produced by all firms at different prices and dividing by the number of firms.
D)  prices charged by all firms for any given quantity.
E)  marginal revenue curves of all firms in the market.

Question 18

Costs that do not vary with output are called

Accepted Answer

A)  total costs.
B)  short-run costs.
C)  long-run costs.
D)  variable costs.
E)  fixed costs.

Question 19

A competitive firm's marginal revenue curve is the same as its demand curve.

Accepted Answer

A) True 
 B)False

Question 20

What is the major characteristic of a competitive market?

Accepted Answer

A market is competit...

Exam 6: The Supply Curve and the Behavior of Firms

Revenue is the only factor that affects profits.

Correct AnswerverifiedShow Answer

Marginal cost begins to increase when

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The curve that indicates how much output a profit-maximizing competitive firm will produce at any given price is the

Correct AnswerverifiedShow Answer

The market supply curve tends to get steeper as output increases.

Correct AnswerverifiedShow Answer

All types of firms suffer from managerial conflicts.

Correct AnswerverifiedShow Answer

What is the major characteristic of a competitive market?

Correct AnswerverifiedA market is competit...View AnswerShow Answer

A competitive firm's marginal revenue curve is the same as its demand curve.

Correct AnswerverifiedShow Answer

A monopoly is a price-maker.

Correct AnswerverifiedShow Answer

In economics, the main objective of a firm is to maximize customer satisfaction.

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Profit is usually ____ producer surplus for a firm.

Correct AnswerverifiedShow Answer

If price is greater than marginal cost and output is infinitely divisible, then

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Exhibit 6-8 -Refer to Exhibit 6-8. Total revenue in the market is illustrated by area

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Exhibit 6-5 -Refer to Exhibit 6-5. At Q4,

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Exhibit 6-6 -The market supply curve is obtained by summing

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Marginal cost increases because

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For a competitive firm, which of the following is false?

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

Correct AnswerverifiedThe market supply is the horizontal summ...View AnswerShow Answer

Costs that do not vary with output are called

Correct AnswerverifiedShow Answer

The term diminishing returns to labor means that

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A cost curve shows the amount of output for any given amount of input.

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A market is competit...
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Exhibit 6-5 -Refer to Exhibit 6-5. At Q₄,

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The market supply is the horizontal summ...
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