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Ch3 - Ch3 Student 1 A firm will maximize profit by...

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Ch3 Student: ___________________________________________________________________________ 1. A firm will maximize profit by producing that level of output at which A. the additional revenue from the last unit sold exceeds the additional cost of the last unit by the largest amount. B. the additional revenue from the last unit sold equals the additional cost of the last unit. C. total revenue exceeds total cost by the largest amount. D. total revenue equals total cost. E. both b and c 2. The function a decision maker seeks to maximize or minimize is the ________ function. 3. Choice variables 4. For an unconstrained maximization problem 5. When marginal cost is greater than marginal benefit at the current activity level, the decision maker can increase net benefit by decreasing the activity because A. total benefit will rise by more than total cost will rise. B. marginal cost is rising faster than marginal benefit is falling. C. net benefit is upward sloping at this point. D. total cost will fall by more than total benefit will fall. 6. For a constrained minimization problem, the decision maker
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7. A continuous choice variable The next 3 questions refer to the following: An agency is having problems with personal phone calls made during working hours. Each minute of a personal call costs the agency $0.50 in wasted wages. The agency decides to hire operators to monitor calls in order to attain the optimal number of personal calls (minimize total cost of personal calls).
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