Question 1

Two units of a good are sold at $10.00 each and three units of the good are sold at $9.00 each. The marginal revenue from the third unit sold is:

Accepted Answer

A)   -$1.00.
B)   $2.00.
C)   $7.00.
D)   $19.00.

Question 2

If using a good has no cost, net benefit will be maximized where total benefit is:

Accepted Answer

A)   zero.
B)   at its maximum.
C)   equal to marginal utility.
D)   none of the above.

Question 3

Which of the following statements is true regarding net benefits?

Accepted Answer

A)   Net benefit equals total benefit less marginal benefit.
B)   Net benefit is maximized at the point where marginal cost equals marginal benefit.
C)   Net benefit decreases when marginal benefit is greater than marginal cost.
D)   net benefit cannot be negative.

Question 4

-At what number of units of Good X consumed is marginal benefit minus marginal cost equal to zero?

Accepted Answer

A)   0.
B)   4.
C)   10.
D)   Both 0 and 10.

Question 5

If the marginal cost of carrying out the first unit of an activity is $100 and the marginal cost of carrying out the second unit is $200, then the total cost of carrying out two units of the activity is $300.

Accepted Answer

A) True 
 B)False

Question 6

Payments that a business makes to acquire factors of production, such as labor, raw materials, and machinery are known as implicit costs.

Accepted Answer

A) True 
 B)False

Question 7

-If, in this figure, ten units of Good A are consumed, then at this point marginal cost:

Accepted Answer

A)   equals marginal benefit.
B)   is less than marginal benefit.
C)   is greater than marginal benefit.
D)   may be equal to, less than, or greater than marginal benefit.

Question 8

If an action by an individual has a positive external effect, the level of activity that maximizes the individual's well-being is:

Accepted Answer

A)   equal to the level that maximizes society's well-being.
B)   less than the level that maximizes society's well-being.
C)   greater than the level that maximizes society's well-being.
D)   equal to, less than, or greater than the level that maximizes society's well-being, depending on the strength of the external effect.

Question 9

-According to this figure, for 6 through 8 units of Good X consumed, marginal benefit is:

Accepted Answer

A)   less than marginal cost, and total benefit is less than total cost.
B)   less than marginal cost, and total benefit is greater than total cost.
C)   greater than marginal cost, and total benefit is less than total cost.
D)   greater than marginal cost, and total benefit is greater than total cost.

Question 10

Why would a business decrease its profit by increasing its output if marginal revenue were less than marginal cost at its current level of output?

Accepted Answer

If marginal revenue were less ...

Question 11

At a price of $25.00, 8 units of a good are sold, and at a price of $24.00, 9 units are sold. The marginal revenue from the ninth unit is:

Accepted Answer

A)   -$1.00.
B)   $1.00.
C)   $16.00.
D)   $24.00.

Question 12

Given the table below, what is total revenue when three units are sold?

Accepted Answer

A)   $24.
B)   $68.
C)   $168.
D)   $204.

Question 13

Daisy Plant owns and operates Rosey's Poseys, a new flower shop. Ms. Plant's accountant has calculated that her costs this past year totaled $140,000 and that her revenue was $200,000, giving her a profit of $60,000. Ms. Plant's economist friend said that her profit was not really $60,000, but that she had a loss of $10,000. Ms. Plant's economist friend:

Accepted Answer

A)   figured implicit costs to be $70,000.
B)   included all costs necessary to keep production going.
C)   calculated the economic cost of production in determining Ms. Plant's profit condition.
D)   all of the above.

Question 14

What is normal profit, and why is it considered to be a cost of production for a business?

Accepted Answer

Normal profit is the amount a firm needs...

Question 15

-In going from three to four units of activity, net benefit would:

Accepted Answer

A)   increase because total benefit is increasing.
B)   decrease because marginal benefit is decreasing.
C)   increase because total benefit is greater than zero.
D)   decrease because marginal cost is greater than marginal benefit.

Question 16

-For the firm represented in this figure, marginal cost equals marginal revenue at approximately:

Accepted Answer

A)   200 units of output.
B)   300 units of output.
C)   zero units and 300 units of output.
D)   zero units, 200 units, and 300 units of output.

Question 17

A negative externality causes persons who are not involved in an action to experience lower costs or prices because the action was performed.

Accepted Answer

A) True 
 B)False

Question 18

Net benefit is at a maximum at the activity level where total benefit exceeds total cost by the greatest amount.

Accepted Answer

A) True 
 B)False

Question 19

-Assume that the firm in this figure is operating at a profit. As this firm increases its level of output from 200 to 300 units, its profit will:

Accepted Answer

A)   increase.
B)   decrease.
C)   remain unchanged.
D)   increase at first, and then decrease.

Question 20

Total utility is the:

Accepted Answer

A)   satisfaction from each unit of a good or service consumed.
B)   satisfaction from the total amount of a good or service consumed.
C)   change in total satisfaction from consuming an additional unit of a good or service.
D)   difference between the satisfaction from consuming a good or service and its cost.

Exam 11: Benefits, Costs, and Maximization

-In going from three to four units of activity, net benefit would:

Correct Answer
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Total utility is the:

Correct Answer
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If using a good has no cost, net benefit will be maximized where total benefit is:

Correct Answer
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Given the table below, what is total revenue when three units are sold?

Correct Answer
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-According to this figure, for 6 through 8 units of Good X consumed, marginal benefit is:

Correct Answer
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Two units of a good are sold at $10.00 each and three units of the good are sold at $9.00 each. The marginal revenue from the third unit sold is:

Correct Answer
verified

A negative externality causes persons who are not involved in an action to experience lower costs or prices because the action was performed.

Correct Answer
verified

Payments that a business makes to acquire factors of production, such as labor, raw materials, and machinery are known as implicit costs.

Correct Answer
verified

What is normal profit, and why is it considered to be a cost of production for a business?

Correct Answer
verified
Normal profit is the amount a firm needs...
View Answer

-If, in this figure, ten units of Good A are consumed, then at this point marginal cost:

Correct Answer
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At a price of $25.00, 8 units of a good are sold, and at a price of $24.00, 9 units are sold. The marginal revenue from the ninth unit is:

Correct Answer
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If the marginal cost of carrying out the first unit of an activity is $100 and the marginal cost of carrying out the second unit is $200, then the total cost of carrying out two units of the activity is $300.

Correct Answer
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Net benefit is at a maximum at the activity level where total benefit exceeds total cost by the greatest amount.

Correct Answer
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-At what number of units of Good X consumed is marginal benefit minus marginal cost equal to zero?

Correct Answer
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Which of the following statements is true regarding net benefits?

Correct Answer
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Why would a business decrease its profit by increasing its output if marginal revenue were less than marginal cost at its current level of output?

Correct Answer
verified
If marginal revenue were less ...
View Answer

-For the firm represented in this figure, marginal cost equals marginal revenue at approximately:

Correct Answer
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-Assume that the firm in this figure is operating at a profit. As this firm increases its level of output from 200 to 300 units, its profit will:

Correct Answer
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Correct Answer
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If an action by an individual has a positive external effect, the level of activity that maximizes the individual's well-being is:

Correct Answer
verified

Exam 11: Benefits, Costs, and Maximization

-In going from three to four units of activity, net benefit would:

Correct AnswerverifiedShow Answer

Total utility is the:

Correct AnswerverifiedShow Answer

If using a good has no cost, net benefit will be maximized where total benefit is:

Correct AnswerverifiedShow Answer

Given the table below, what is total revenue when three units are sold?

Correct AnswerverifiedShow Answer

-According to this figure, for 6 through 8 units of Good X consumed, marginal benefit is:

Correct AnswerverifiedShow Answer

Two units of a good are sold at $10.00 each and three units of the good are sold at $9.00 each. The marginal revenue from the third unit sold is:

Correct AnswerverifiedShow Answer

A negative externality causes persons who are not involved in an action to experience lower costs or prices because the action was performed.

Correct AnswerverifiedShow Answer

Payments that a business makes to acquire factors of production, such as labor, raw materials, and machinery are known as implicit costs.

Correct AnswerverifiedShow Answer

What is normal profit, and why is it considered to be a cost of production for a business?

Correct AnswerverifiedNormal profit is the amount a firm needs...View AnswerShow Answer

-If, in this figure, ten units of Good A are consumed, then at this point marginal cost:

Correct AnswerverifiedShow Answer

At a price of $25.00, 8 units of a good are sold, and at a price of $24.00, 9 units are sold. The marginal revenue from the ninth unit is:

Correct AnswerverifiedShow Answer

If the marginal cost of carrying out the first unit of an activity is $100 and the marginal cost of carrying out the second unit is $200, then the total cost of carrying out two units of the activity is $300.

Correct AnswerverifiedShow Answer

Net benefit is at a maximum at the activity level where total benefit exceeds total cost by the greatest amount.

Correct AnswerverifiedShow Answer

-At what number of units of Good X consumed is marginal benefit minus marginal cost equal to zero?

Correct AnswerverifiedShow Answer

Which of the following statements is true regarding net benefits?

Correct AnswerverifiedShow Answer

Why would a business decrease its profit by increasing its output if marginal revenue were less than marginal cost at its current level of output?

Correct AnswerverifiedIf marginal revenue were less ...View AnswerShow Answer

-For the firm represented in this figure, marginal cost equals marginal revenue at approximately:

Correct AnswerverifiedShow Answer

-Assume that the firm in this figure is operating at a profit. As this firm increases its level of output from 200 to 300 units, its profit will:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If an action by an individual has a positive external effect, the level of activity that maximizes the individual's well-being is:

Correct AnswerverifiedShow Answer

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Normal profit is the amount a firm needs...
View Answer

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If marginal revenue were less ...
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