Microeconomics Midterm ch 13, 14, 15
The marginal cost curve crosses the average total cost curve at the efficient scale. the minimum point on the average total cost curve. a point where the marginal cost curve is rising. All of the above are correct.
All of the above are correct
A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the 100th unit for $4.75. The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses).
False
A firm will shut down in the short run if revenue is not sufficient to cover all of its fixed costs of production
False
If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising. True False
False
In the short run, a firm should exit the industry if its marginal cost exceeds its marginal revenue.
False
Profit equals marginal revenue minus marginal cost. True False
False
The average fixed cost curve is constant. True False
False
The average total cost curve is unaffected by diminishing marginal product. True False
False
Which of the following is not a characteristic of a competitive market?
Free entry is limited.
If the marginal cost of producing the tenth unit of output is $3, and if the average total cost of producing the tenth unit of output is $2, then at ten units of output, average total cost is rising. True False
True
Suppose a firm is considering producing zero units of output. We call this shutting down in the short run and exiting an industry in the long run.
True
The marginal cost curve intersects the average total cost curve at the minimum point of the average total cost curve. True False
True
The shape of the total cost curve is related to the shape of the production function. True False
True
Variable costs usually change as the firm alters the quantity of output produced. True False
True
Which of the following expressions is correct? marginal cost = (change in quantity of output)/(change in total cost) average total cost = (total cost)/(quantity of output) total cost = variable cost + marginal cost average variable cost = (quantity of output)/(total variable cost)
average total cost = (total cost)/(quantity of output)
For a firm in a perfectly competitive market, the price of the good is always
equal to marginal revenue.
Which of the following costs do not vary with the amount of output a firm produces? average fixed costs fixed costs and average fixed costs marginal costs and average fixed costs fixed costs
fixed costs
When price rises from P3 to P4, the firm finds that
it can earn a positive profit by increasing production to Q4.
Which of the following measures of cost is best described as "the increase in total cost that arises from an extra unit of production?"
marginal cost
If the market price is P3, in the short run, the perfectly competitive firm will earn
negative economic profits but will try to remain open.
A profit-maximizing firm will shut down in the short run when
price is less than average variable cost.
When buyers in a competitive market take the selling price as given, they are said to be
price takers.
When price falls from P3 to P1, the firm finds that it
should shut down immediately.
The amount of money that a firm receives from the sale of its output is called
total revenue
What is the shape of the marginal cost curve for this firm?
upward-sloping
What is average fixed cost when output is 40 units?
$1.00
A certain firm produces and sells staplers. Last year, it produced 7,000 staplers and sold each stapler for $6. In producing the 7,000 staplers, it incurred variable costs of $28,000 and a total cost of $45,000.Refer to Scenario 13-6. The firm's fixed costs amounted to
$17,000.
What is the marginal cost of the 4th gigaplot at Jimmy's Gigaplot factory?
$19
For a firm operating in a competitive market, the marginal revenue is
$7.
What is the marginal cost of producing the fifth unit of output?
$70
If the market price is $8, how many units should the firm produce to maximize profit?
6 units
Which of the following statements best expresses a firm's profit-maximizing decision rule? If marginal revenue is greater than marginal cost, the firm should increase its output. If marginal revenue is less than marginal cost, the firm should decrease its output. If marginal revenue equals marginal cost, the firm should continue producing its current level of output. All of the above are correct.
All of the above are correct.
Which of the following statements regarding a competitive market is not correct?
Because of firm location or product differences, some firms can charge a higher price than other firms and still maintain their sales volume.
The efficient scale of production occurs at which quantity?
C
Over what range of output is marginal revenue declining?
None; marginal revenue is constant over the entire range of output
Which of the following can be added to profit to obtain total revenue?
Total cost
Firms operating in perfectly competitive markets produce an output level where marginal revenue equals marginal cost.
True
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.
i) only
