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Test Bank For Microeconomics Principles Policy 14th Edition William J Baumol Alan S Blinder John L Solow
Test Bank For Microeconomics Principles Policy 14th Edition William J Baumol Alan S Blinder John L Solow
Test Bank For Microeconomics Principles Policy 14th Edition William J Baumol Alan S Blinder John L Solow
chapter 8
1. If marginal profit is negative when the firm produces one more unit, then the firm is currently maximizing profits.
a. True
b. False
2. The rule of equating marginal benefit with marginal cost is a tool that can be applied to a wide variety of decisions, not
just economics.
a. True
b. False
3. Given total cost and the quantity of output, marginal cost and average cost can be determined.
a. True
b. False
4. When a firm’s fixed costs increase it should raise its prices in order to maximize profits.
a. True
b. False
6. Total revenue cannot be derived from the demand curve or a demand schedule.
a. True
b. False
8. If the price of a product is $10 per unit and the variable cost per unit is $5, the firm is making a profit.
a. True
b. False
11. If marginal cost of an additional unit of output is greater than average cost, then average cost will rise.
a. True
b. False
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chapter 8
12. If a firm’s marginal profit is negative, it should reduce its output level.
a. True
b. False
13. In the case study discussed in the chapter, the electronics firm was losing money by selling its calculators at a price
that was below average cost.
a. True
b. False
14. If a firm’s fixed costs increase, then profits drop but its output should not change.
a. True
b. False
16. Marginal analysis is useful in economics, but not in other areas of life.
a. True
b. False
17. If the marginal profit of the next unit is negative, the firm should produce more output in order to generate greater
profit.
a. True
b. False
18. Whenever marginal cost is positive, average cost curves are upward sloping.
a. True
b. False
19. If the average cost of a product is $10 per unit and the price is $5, the firm is losing money.
a. True
b. False
21. The average revenue curve can also be described as the demand curve.
a. True
b. False
chapter 8
23. A firm’s total profit is the difference between its sales and what it pays out in costs.
a. True
b. False
24. All business firms should consider their fixed costs in determining the prices they set.
a. True
b. False
25. A firm is generally more interested in marginal profits than in total profits.
a. True
b. False
26. Firms need to know the shape of a demand curve to use marginal analysis.
a. True
b. False
27. A small business owner who is earning a positive economic profit, no matter how small, is doing better than if he or
she sold his or her business and went to work for another firm.
a. True
b. False
28. Marginal profit equals the difference between marginal revenue and average cost.
a. True
b. False
29. Profit is maximized at the output at which marginal revenue exceeds marginal cost by the greatest margin.
a. True
b. False
30. A firm’s total revenue is simply the price of its product multiplied by the quantity sold.
a. True
b. False
31. Economists assume that business firms have many goals, and profit maximization is just one of them.
a. True
b. False
chapter 8
34. Economists and accountants have very different definitions of profit.
a. True
b. False
35. Marginal revenue equals the change in total revenue that is earned by selling one more unit of output.
a. True
b. False
36. Total profit is represented by the vertical distance between a total revenue curve and a total cost curve.
a. True
b. False
37. A firm that is earning zero economic profit should go out of business.
a. True
b. False
38. Marginal revenue is the addition to total revenue resulting from the addition of one unit to total output.
a. True
b. False
39. Average cost equals total cost multiplied by the number of units of output.
a. True
b. False
41. If total profit is maximized, then marginal cost must equal marginal revenue.
a. True
b. False
43. If the quantity output and average cost at that output level are known, then it is possible to determine marginal cost for
that output level.
a. True
b. False
44. A firm should keep producing output as long as the marginal profit is greater than zero, no matter how small it is.
a. True
b. False
Marcagi.
J. L.