Lesson 8 Quiz

C

Refer to table 4: For this firm, the marginal revenue is A. $0. B. $26. C. $13. D. $39.

B

Refer to table 2: What is the average revenue when 4 units are sold? A. $60 B. $120 C. $125 D. $197

D

A firm will shut down in the short run if, for all positive levels of output, A. its losses exceed its fixed costs. B. its total revenue is less than its variable costs. C. the price of its product is less than its average variable cost. D. All of the above are correct.

B

A firm's marginal cost has a minimum value of $4, its average variable cost has a minimum value of $6, and its average total cost has a minimum value of $7. Then the firm will shut down in the short run once the price of its product falls below A. $4. B. $6. C. $7. D. We do not have enough information to answer the question.

B

Refer to table 2: What is the marginal revenue from selling the 3rd unit? A. $55 B. $120 C. $137 D. $140

A

Competitive markets are characterized by A. free entry and exit by firms. B. the interdependence of firms. C. unique products. D. a small number of buyers and sellers.

D

Refer to Table 3: If the firm's marginal cost is $11, it should A. increase production to maximize profit. B. increase the price of the product to maximize profit. C. advertise to attract additional buyers to maximize profit. D. reduce production to increase profit.

B

Refer to table 10: If the market price is $16, this firm will A. produce 4 units of output in the short run and exit in the long run. B. produce 5 units of output in the short run and face competition from new market entrants in the long run. C. produce 5 units of output in the short run and exit in the long run. D. shut down in the short run and exit in the long run.

D

Refer to table 1: Over what range of output is marginal revenue declining? A. 1 to 6 units B. 3 to 7 units C. 7 to 9 units D. Marginal revenue is constant over the entire range of output.

D

Refer to table 1: Over which range of output is average revenue equal to price? A. 1 to 5 units B. 3 to 7 units C. 5 to 9 units D. Average revenue is equal to price over the entire range of output.

C

Refer to table 5: The firm will produce a quantity greater than 3 because at 3 units of output, marginal cost A. equals marginal revenue. B. is greater than marginal revenue. C. is less than marginal revenue. D. is minimized.

D

Refer to table 6: The marginal revenue from producing the 5th unit equals (i) $6. (ii) the price. (iii) the marginal cost. A. (i) and (ii) only B. (i) only C. (iii) only D. (i), (ii), and (iii)

C

Refer to table 7: If the firm's fixed cost of production is $3, and the market price is $10, how many units should the firm produce to maximize profit? A. 4 units B. 1 unit C. 3 units D. 2 units

B

Refer to table 8: For this firm, the average revenue when 14 units are produced and sold is A. $13. B. $11. C. $15. D. $9.

D

Refer to table 9: If the firm is maximizing profit, how much profit is it earning? A. $0.50 B. $10 C. $7.50 D. There is insufficient data to determine the firm's profit.

B

Robin owns a horse stables and riding academy and gives riding lessons for children at "pony camp." Her business operates in a competitive industry. Robin gives riding lessons to 20 children per month. Her monthly total revenue is $4,000. The marginal cost of pony camp is $250 per child. In order to maximize profits, Robin should A. give riding lessons to more than 20 children per month. B. give riding lessons to fewer than 20 children per month. C. continue to give riding lessons to 20 children per month. D. We do not have enough information to answer the question.

B

Suppose a certain competitive firm is producing Q=500 units of output. The marginal cost of the 500th unit is $17, and the average total cost of producing 500 units is $12. The firm sells its output for $20. Refer to Scenario 14-3. At Q=500, the firm's profits equal A. $1,000. B. $4,000. C. $7,000. D. $10,000.

A

Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct? (i) Marginal revenue equals $5. (ii) Average revenue equals $5. (iii) Price equals $5. A. (i), (ii), and (iii) B. (i) only C. (i) and (ii) only D. (iii) only

C

Suppose that a firm operating in perfectly competitive market sells 200 units of output at a price of $3 each. Which of the following statements is correct? (i) Marginal revenue equals $3. (ii) Average revenue equals $600. (iii) Average revenue exceeds marginal revenue, but we don't know by how much. A. (i) and (ii) only B. (iii) only C. (i) only D. (i), (ii), and (iii)

C

Suppose that a firm operating in perfectly competitive market sells 400 units of output at a price of $4 each. Which of the following statements is correct? (i) Marginal revenue equals $4. (ii) Average revenue equals $100. (iii) Total revenue equals $1,600. A. (i) only B. (iii) only C. (i) and (iii) only D. (i), (ii), and (iii)

C

Which of the following is not a characteristic of a competitive market? A. Each firm chooses an output level that maximizes profits. B. Buyers and sellers are price takers. C. Entry is limited. D. Each firm sells a virtually identical product.

B

Which of the following is not a characteristic of a perfectly competitive market? A. Firms 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.