Unit Test

Marginal revenue shows how much money can be made if a producer sells one additional
unit of a good.

Why are utilities, such as electricity and water, examples of natural monopolies?

The cost of production restricts competition in the market.

There are limited natural resources to meet demand.
Consumers only trust known companies to provide these essentials.
There is no need for alternative options.

Which best describes how specialized producers decrease their opportunity costs?

by reducing production costs

by focusing on target markets
by increasing production of certain items
by limiting the types of goods produced

The chart shows the marginal cost and marginal revenue of producing apple pies.

What most likely will happen if the pie maker bakes a seventh pie?

The marginal cost will most likely decrease to $1.00

The marginal cost will most likely increase to $2.00
The marginal revenue will most likely decrease to $8.00.
The marginal revenue will most likely increase to $12.00.

The graph is a marginal cost curve that compares expenses for producing apple pies.
According to the graph, the marginal cost begins to increase when the producer makes

two pies.
three pies.
four pies.
five pies.

Which scenario is an example of market saturation?

The single coffee shop in town usually has a long line of customers and tends to stay busy during
business hours.
There are three shoe stores on one block in town, and they have trouble finding customers and
making a profit.
A second health club will open because the only health club in town is too crowded to accept new
customers.
It can be difficult to get reservations at the only upscale Ethiopian restaurant in town, and it is best to
call in advance.

A monopoly is a market that has

few competing businesses.

many sellers of the same item.
many sellers of a variety of products.
a single supplier of a good or service.
 The chart shows
the marginal cost and marginal revenue of producing apple pies.

What most likely will happen if the pie maker continues to make additional pies?

The marginal costs will continue to rise, increasing the total cost, while the marginal revenue remains
the same, decreasing the profit.
The marginal costs will continue to fall, decreasing the total cost, while the marginal revenue remains
the same, increasing the profit.
The marginal costs will continue to rise, increasing the total cost, while the marginal revenue remains
the same, increasing the profit.
The marginal costs will continue to fall, decreasing the total cost, while the marginal revenue remains
the same, decreasing the profit.

The chart shows a production possibilities schedule for Sabrina’s Soccer.

The schedule shows the combination of goods the business can produce.

What are the factors of production in business?

land, labor, and capital

land, capital, and interest
 land, labor, and customer base
capital, customer base, and interest

In which way do producers try to differentiate themselves in monopolistic competition?

price
advertising
product features
image

This table shows the number of employees needed to fill lunch orders at several food trucks.

Food Truck Number of Lunch Orders Number of Employees

Frank’s Falafels 20 per hour 2

Kimchi Kim’s 25 per hour 3

Deli Delight 30 per hour 3

Lunch on the Go 25 per hour 2

Which food truck has the absolute advantage?

Frank’s Falafels
Kimchi Kim’s
Deli Delight
Lunch on the Go

Why is pure competition considered an unsustainable system?

 Price differentiation is often too minimal to matter.
Few barriers exist to entry, meaning that the market inevitably floods.
Consumers cannot distinguish between products.
Producers cannot make a profit if they keep dropping their prices.

Motherboards, Inc., manufactures computer parts. The company’s total revenue is

the money the company earns after paying all of its production costs.
the total wages the company pays workers in its factories and stores.
the amount of money the company earns from selling an individual part.
the amount the company receives from the sale of all of its computer parts.

What is the difference between marginal cost and marginal revenue?

Marginal cost is the money a producer earns from selling one more unit, while marginal revenue is the
money a producer pays for making one more unit.
Marginal cost is the money a producer pays for making one more unit, while marginal revenue is the
money a producer earns from selling one more unit.
Marginal cost is the money a producer actually earns from selling more units, while marginal revenue is
the money a producer might earn from one more unit.
Marginal cost is the money a producer might earn from one more unit sold, while marginal revenue is
the money a producer will earn from one more unit.