Review Ch 13 and 14
Quiz by Chen, Clara
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- Q1
The competitive firm maximizes profit when it produces output up to the point where
marginal revenue equals average revenue.
marginal cost equals marginal revenue.
marginal cost equals total revenue.
price equals average variable cost.
30s - Q2
Pete owns a shoe-shine business. His accountant most likely includes which of the following costs on his financial statements?
Shoe polish and wages Pete could earn delivering newspapers
Shoe polish and rent on the shoe stand
Rent on the shoe stand and interest that Pete's money was earning before he spent his savings to set up the shoe-shine business
Wages Pete could earn delivering newspapers and interest that Pete's money was earning before he spent his savings to set up the shoe-shine business
30s - Q3
For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $11 and a marginal cost of $10. It follows that the
firm's profit-maximizing level of output is less than 100 units.
production of the 101st unit of output must increase the firm's profit by more than $1.
production of the 100th unit of output increases the firm's profit by $1
production of the 100th unit of output increases the firm's average total cost by $1.
30s - Q4
Use the following information to answer question. Madelyn owns a small pottery factory. She can make 1,000 pieces of pottery per year and sell them for $100 each. It costs Madelyn $20,000 for the raw materials to produce the 1,000 pieces of pottery. She has invested $100,000 in her factory and equipment: $50,000 from her savings and $50,000 borrowed at 10 percent (assume that she could have loaned her money out at 10 percent, too). Madelyn can work at a competing pottery factory for $40,000 per year.
The accounting profit at Madelyn's pottery factory is
35,000
75,000
80,000
70,000
30s - Q5
The efficient scale of production is the quantity of output that minimizes
AVC
MC
ATC
AFC
30s - Q6
An example of an explicit cost of production would be the
lease payments for the land on which a firm's factory stands.
lost opportunity to invest in capital markets when the money is invested in one's business.
value of the time the business could've spent producing something else.
cost of forgone labor earnings for an entrepreneur.
30s - Q7
If there are implicit costs of production,
economic profit will always be zero.
economic profit will exceed accounting profit.
economic profit and accounting profit will be equal.
accounting profit will exceed economic profit.
30s - Q8
A grocery store should close at night if the
total costs of staying open are greater than the total revenue due to staying open.
variable costs of staying open are greater than the total revenue due to staying open.
total costs of staying open are less than the total revenue due to staying open.
variable costs of staying open are less than the total revenue due to staying open.
30s - Q9
In long-run equilibrium in a competitive market, firms are operating at
their efficient scale.
the minimum of their average-total-cost curves.
all of the above.
the intersection of marginal cost and marginal revenue.
30s - Q10
Which of the following is not a characteristic of a competitive market?
The goods offered for sale are largely the same.
There are many buyers and sellers in the market.
Firms generate small but positive economic profits in the long run.
Firms can freely enter or exit the market.
30s