Question 1

A profit-maximizing firm will never hire that quantity of a factor of production for which that factor has an increasing marginal productivity because

Accepted Answer

A)  it would not be maximizing output.
B)  it would not be maximizing the productivity of labor.
C)  it would not be minimizing costs.
D)  it would not be maximizing profits.

Question 2

If a firm wished to maximize total revenues it should produce where

Accepted Answer

A)  marginal cost is zero.
B)  marginal revenue is zero.
C)  marginal revenue is equal to marginal cost.
D)  marginal revenue is equal to price.

Question 3

The substitution effect of a change in wage rate on a firm's demand for labor input will be more significant

Accepted Answer

A)  the greater the change in output.
B)  the more sharply curved are the firm's isoquants.
C)  the flatter are the firm's isoquants.
D)  the larger the quantity of labor employed.

Question 4

If the wage rate rises,labor's share in the total costs of a production process

Accepted Answer

A)  will increase.
B)  will decrease.
C)  may increase or decrease depending on the elasticity of demand for the product.
D)  may increase or decrease depending on the ease of substitution of other inputs for labor.

Question 5

If a firm's marginal revenue is below its marginal cost,an increase in production will usually

Accepted Answer

A)  increase profits.
B)  leave profits unchanged.
C)  decrease profits.
D)  increase marginal revenue.

Question 6

A firm's demand for labor is known as a "derived demand" because

Accepted Answer

A)  the firm gains utility from hiring more labor.
B)  the amount of labor hired depends upon how much output the firm can sell.
C)  the wage rate paid to workers is derived from the market for labor.
D)  it is derived from the demand for capital.

Question 7

It is usually assumed that a perfectly competitive firm's supply curve is given by its marginal cost curve.In order for this to be true,which of the following additional assumptions are necessary: 
I.That the firm seek to maximize profits.
II.That the margnal cost curve be positively sloped.
III.That price exceed average variable cost.
IV.That price exceed average total cost.

Accepted Answer

A)  all of the above.
B)  I and II but not III and IV.
C)  I and III but not II and IV.
D)  I and II only.
E)  I,II and III,but not IV.

Question 8

If a price-taking firm's production function is given by  q=lq = \sqrt { l }q=l​  ,its profit function is given by

Accepted Answer

A)    p/2wp / 2 wp/2w  .
B)    p2/2wp ^ { 2 } / 2 wp2/2w  .
C)    p/2w2p / 2 w ^ { 2 }p/2w2  .
D)    p2/4wp ^ { 2 } / 4 wp2/4w  .

Question 9

Profit functions are homogeneous of degree

Accepted Answer

A)  zero in input and output prices
B)  zero in input prices.
C)  one in input and output prices.
D)  one in input prices.

Question 10

If price is equal to short-run average variable cost,the firm is at the point known as

Accepted Answer

A)  the break even point.
B)  the profit maximizing point.
C)  the shutdown point.
D)  the revenue maximizing point.

Question 11

A firm will hire additional units of any input up to the point where

Accepted Answer

A)  the marginal productivity of the input is maximized.
B)  the marginal cost of employing the input is minimized.
C)  the expense of employing the last unit is equal to the revenue brought in by the last unit.
D)  the revenue brought in by the input is maximized.

Question 12

If a firm is a price taker,its marginal revenue is

Accepted Answer

A)  equal to market price.
B)  less than market price.
C)  greater than market price.
D)  a multiple of market price that may be either greater than or less than one.

Exam 9: Profit Maximization

If price is equal to short-run average variable cost,the firm is at the point known as

Correct Answer
verified

If a firm is a price taker,its marginal revenue is

Correct Answer
verified

A firm will hire additional units of any input up to the point where

Correct Answer
verified

If the wage rate rises,labor's share in the total costs of a production process

Correct Answer
verified

If a firm's marginal revenue is below its marginal cost,an increase in production will usually

Correct Answer
verified

Correct Answer
verified

A firm's demand for labor is known as a "derived demand" because

Correct Answer
verified

Profit functions are homogeneous of degree

Correct Answer
verified

If a price-taking firm's production function is given by $q = \sqrt { l }$ ,its profit function is given by

Correct Answer
verified

The substitution effect of a change in wage rate on a firm's demand for labor input will be more significant

Correct Answer
verified

If a firm wished to maximize total revenues it should produce where

Correct Answer
verified

A profit-maximizing firm will never hire that quantity of a factor of production for which that factor has an increasing marginal productivity because

Correct Answer
verified

Exam 9: Profit Maximization

If price is equal to short-run average variable cost,the firm is at the point known as

Correct AnswerverifiedShow Answer

If a firm is a price taker,its marginal revenue is

Correct AnswerverifiedShow Answer

A firm will hire additional units of any input up to the point where

Correct AnswerverifiedShow Answer

If the wage rate rises,labor's share in the total costs of a production process

Correct AnswerverifiedShow Answer

If a firm's marginal revenue is below its marginal cost,an increase in production will usually

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A firm's demand for labor is known as a "derived demand" because

Correct AnswerverifiedShow Answer

Profit functions are homogeneous of degree

Correct AnswerverifiedShow Answer

If a price-taking firm's production function is given by q=lq = \sqrt { l }q=l​ ,its profit function is given by

Correct AnswerverifiedShow Answer

The substitution effect of a change in wage rate on a firm's demand for labor input will be more significant

Correct AnswerverifiedShow Answer

If a firm wished to maximize total revenues it should produce where

Correct AnswerverifiedShow Answer

A profit-maximizing firm will never hire that quantity of a factor of production for which that factor has an increasing marginal productivity because

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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If a price-taking firm's production function is given by $q = \sqrt { l }$ ,its profit function is given by

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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