The loss associated with the fact that at the profit-maximizing quantity consumers value the goods more than it cost to produce them is called A) deadweight loss. B) comparative loss. C) Lerner Loss. D) Consumer Value Loss. ANSWER A
Date: September 9th, 2020
In a graph of a firm’s short-run total costs and total revenue, the total cost and the total revenue curves, respectively, will intersect the vertical axis A) above the origin, above the origin. B) above the origin, at the origin. C) at the origin, at the origin. D) below the origin, below the origin. […]
Date: September 9th, 2020
Suppose a competitive firm’s total revenue is $1,000,000 where MR = MC, its explicit variable costs are $900,000, its fixed costs are $90,000 of which $60,000 are sunk in the short run. If its implicit opportunity costs are $50,000, the firm should A) produce because its economic profit is positive. B) produce because its economic […]
Date: September 9th, 2020
The reasons why a competitive firm’s short-run supply curve is upward sloping are A) the law of diminishing marginal returns and profit maximization. B) constant returns to scale and profit maximization. C) decreasing returns to scale and profit maximization. D) Both B and C. ANSWER A
Date: September 9th, 2020
The competitive firm’s supply curve is equal to A) its marginal cost curve. B) the portion of its marginal cost curve that lies above AC. C) the portion of its marginal cost curve that lies above AVC. D) the portion of its marginal cost curve that lies above AFC. ANSWER C
Date: September 9th, 2020
A firm should always shut down if its revenue is A) declining. B) less than its average fixed costs. C) less than its total costs. D) less than its avoidable costs. ANSWER D
Date: September 9th, 2020
If a profit-maximizing firm finds that, at its current level of production, MR < MC, it will A) decrease output. B) increase output. C) shut down. D) operate at a loss. ANSWER A
Date: September 9th, 2020
If a firm sets marginal revenue equal to marginal cost, it will make an economic profit. Indicate whether the statement is true or false ANSWER False. When a firm sets MR=MC it maximizes profits but the profit-maximizing level of output might still be negative (the smallest loss possible).
Date: September 9th, 2020
Suppose a monopolist has TC = 40 + 10Q + Q2, and the demand curve it faces is p = 130 – 2Q. What is the Lerner index of this profit-maximizing monopolist? A) 0.222 B) 0.35 C) 0.444 D) 0.50 ANSWER C
Date: September 9th, 2020
If a firm goes out of business because of negative economic profits, its books A) might indicate a positive accounting profit. B) might indicate that opportunity costs were zero. C) might indicate that taxes are too high. D) might suggest a mistaken value of explicit costs. ANSWER A
Date: September 9th, 2020
