Quiz #3

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then a. a one-unit increase in output will increase the firm's profit. b. a one-unit decrease in output will increase the firm's profit. c. total revenue exceeds total cost. d. total cost exceeds total revenue.

a

Refer to Figure 2. Based on the long-run ATC, at levels of output less than M, the firm experiences a. economies of scale. b. diseconomies of scale. c. constant returns to scale. d. both diminishing marginal productivity and coordination problems.

a

Refer to Figure 3. At the output level of B, the firm a. should increase production in order lower per unit production costs b. should not change its level of output because it is operating at the most efficient level c. should decrease production in order to lower per unit production costs d. is maximizing its profit

a

Refer to Table 3. For this firm, marginal revenue at an output of 10 units is a. ​$15. b. ​$150. c. ​$1500. d. ​$0.

a

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect a. new firms to enter the market. b. the market price to rise. c. its profits to rise. d. Both b and c are correct.

a

Table 1 QuantityofOutput FixedCost VariableCost TotalCost AverageFixedCost AverageVariableCost AverageTotalCost MarginalCost 1 $23 $33 2 $38 3 $70 4 $64 5 $110 6 $118 7 $143 8 $185 5. Refer to Table 1. What is the fixed cost of production for this firm? a. $10 b. $20 c. $23 d. $33

a

The figure below depicts average total cost functions for a firm that produces automobiles. Figure 2 10. Refer to Figure 2. Which of the curves is most likely to characterize the short-run average total cost curve of the smallest factory? a. ATCA b. ATCB c. ATCC d. ATCD

a

Total revenue minus only explicit costs is called a. accounting profit. b. economic profit. c. average total cost. d. implicit profit.

a

Which of the figures represents the marginal cost curve for a typical firm? a. Figure 1 b. Figure 2 c. Figure 3 d. Figure 4

a

Which of the figures represents the total cost curve for a typical firm? a. Figure 1 b. Figure 2 c. Figure 3 d. Figure 4

b

Which of the following is not a characteristic of a perfectly competitive market? a. Firms and buyers are are price takers. b. Firms have difficulty entering the market. c. There are many sellers in the market. d. Goods offered for sale are largely the same.

b

A firm's economic costs of production are equal to its a. explicit costs only. b. implicit costs only. c. explicit costs + implicit costs. d. explicit costs + implicit costs + total revenue.

c

Figure 3 13. Refer to Figure 3. The efficient scale of production occurs at which quantity? a. A b. B c. C d. D

c

Refer to Table 1. What is the average total cost of producing 6 units of output? a. $19.67 b. $20.00 c. $21.33 d. $21.86

c

Table 2Listed in the table are the long-run total costs for three different firms. Quantity 1 2 3 4 5 Firm A 100 100 100 100 100 Firm B 100 200 300 400 500 Firm C 100 300 600 1,000 1,500 8. Refer to Table 2. Which firm is experiencing diseconomies of scale? a. Firm A only b. Firm B only c. Firm C only d. Firm A and Firm B only

c

Table 3 The table represents the demand information for a firm in a competitive market. Quantity Total Revenue 8 $120 9 $135 10 $150 11 $165 12 $180 13 $195 18. Refer to Table 3. For this firm, the price is a. ​$120 b. ​$10 c. ​$15 d. ​$5

c

Figure 4 15. Refer to Figure 4. Curve A represents which type of cost curve? a. marginal cost b. average total cost c. average variable cost d. average fixed cost

d

Refer to Figure 2. Which curve represents the long-run average total cost? a. ATCA b. ATCB c. ATCC d. ATCD

d

Refer to Table 1. What is the marginal cost of the 8th unit of output? a. $20.00 b. $21.86 c. $23.13 d. $32.00

d

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, total revenue will be a. $2,000. b. $2,400. c. $4,200. d. We do not have enough information to answer the question.

b

A production function describes a. how a firm maximizes profits. b. how a firm turns inputs into output. c. the minimal cost of producing a given level of output. d. the relationship between cost and output.

b

Assume a firm in a competitive industry is producing 800 units of output, and it sells each unit for $6. Its average total cost is $4. Its profit is a. -$1,600. b. $1,600. c. $3,200. d. $8,000.

b

Figure 1 4. Refer to Figure 1. Why doesn't the total cost curve begin at the origin (the point 0,0)? a. because variable costs are positive when output is zero b. because fixed costs are positive when output is zero c. because the firm is producing at the efficient scale d. because the firm is maximizing profit

b

In the short run, a firm operating in a competitive industry will shut down if price is a. less than average total cost. b. less than average variable cost. c. greater than average variable cost but less than average total cost. d. greater than marginal cost.

b

Refer to Figure 4. Curve A is always declining because a. of diminishing marginal product. b. we are dividing fixed costs by higher and higher levels of output. c. marginal product first increases, then decreases. d. marginal product first decreases, then increases.

b

Refer to Figure 4. Curve C represents which type of cost curve? a. marginal cost b. average total cost c. average variable cost d. average fixed cost

b

Refer to Table 2. Which firm is experiencing constant returns to scale? a. Firm A only b. Firm B only c. Firm C only d. Firm A and Firm B only

b