Q1. Average total cost is equal to a. AFC + AVC b. AFC/total output c. AFC/AVC d. AVC/AFC Q2. As output increases, the ATC a. increases b. decreases c. remains constant d. falls and then rises Q3....

Q1. Average total cost is equal to

a. AFC + AVC

b. AFC/total output

c. AFC/AVC

d. AVC/AFC



Q2. As output increases, the ATC

a. increases

b. decreases

c. remains constant

d. falls and then rises



Q3. Total profit is equal to

a. total revenue minus total cost

b. total revenue minus explicit cost

c. total revenue minus variable cost

d. total revenue minus marginal cost



Q4. Marginal cost crosses the

a. AVC curve at the highest point of the AVC curve

b. ATC curve at the lowest point of the ATC curve

c. AFC curve at the lowest point of the AFC curve

d. ATC curve at the highest point of the ATC curve



Q5. Wages paid are an example of an explicit cost of doing business.

a. true

b. false



Q6. Any revenue over and above total cost is labeled economic profit.

a. true

b. false



Q7. If the selling price of a product is $10, the average total cost is $8, and total sales are 5,000 units, the total profit will be

a. $5,000

b. $8,000

c. $10,000

d. $20,000



Q8. Whenever marginal revenue exceeds marginal cost,

a. profit declines if output increases

b. profit increases if output increases

c. losses increase if output increases

d. marginal revenue must be rising



Q9. Under perfectly competitive conditions, marginal revenue is

a. greater than average revenue

b. equal to average revenue

c. less than average revenue

d. equal to the average variable



Q10. A firm's break-even point occurs where

a. marginal revenue equals marginal cost

b. marginal revenue equals average variable cost

c. total revenue equals total cost

d. total revenue equals total variable cost



Q11. The addition to total output resulting from using one more unit of a productive resource is the

a. average product

b. marginal input

c. total product

d. marginal product



Q12. Unlike a firm in pure competition, a monopolist may be able to

a. block the entry of new firms into the industry

b. continue to earn economic profits in the long run

c. earn economic profits in the short run

d. both (a) and (b)



Q13. Producer surplus is the difference between the price the firm is willing to sell its goods and the price it actually receives.

a. true

b. false



Q14. In the long run, under conditions of perfect competition, market forces come into play to

a. enhance profits

b. increase demand

c. eliminate profits

d. separate MR and AR



Q15. Consumer surplus is the area above the demand curve and below the equilibrium price.

a. true

b. false



Q16. Under perfect competition, market price is determined by market demand and supply.

a. true

b. false



Q17. The more that firms advertise, the closer they get to perfect competition.

a. true

b. false



Q18. Perfect competition assumes that a producer is interested in maximizing profit.

a. true

b. false



Q19. In the long run, under conditions of perfect competition, the buyer will eventually be able to buy the product at a

a. price equal to the lowest point on the ATC curve past the optimal scale of operation

b. price below cost

c. price equal to the lowest point on the ATC curve at the optimal scale of operation

d. discount



Q20. The lowest possible ATC curve is attained at the optimal scale of output.

a. true

b. false