ch13 - Chapter13 TheCostsofProduction MULTIPLECHOICE 1.

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Chapter 13  The Costs of Production M ULTIPLE  C HOICE 1. According to the law of supply, a. firms’ production levels are not correlated with the price of a good. b. the supply curve slopes downward. c. firms are willing to produce a greater quantity of a good when the price of the good is higher. d. None of the above are correct. ANSWER: c. firms are willing to produce a greater quantity of a good when the price of the good is higher. TYPE: M DIFFICULTY: 2 SECTION: 13.1 2. Industrial organization is the study of how a. labor unions organize workers in industries. b. profitable firms are in organized industries. c. industries organize for political advantage. d. firms’ decisions regarding prices and quantities depend on the market conditions they face. ANSWER: d. firms’ decisions regarding prices and quantities depend on the market conditions they face. TYPE: M DIFFICULTY: 1 SECTION: 13.1 3. Economists normally assume that the goal of a firm is to (i) sell as much of their product as possible. (ii) set the price of their product as high as possible. (iii) maximize profit. a. (i) and (ii) b. (ii) and (iii) c. (iii) only d. All of the above are correct. ANSWER: c. (iii) only TYPE: M DIFFICULTY: 2 SECTION: 13.1 4. The amount of money that a firm receives from the sale of its output is called a. total gross profit. b. total net profit. c. total revenue. d. net revenue. ANSWER: c. total revenue. TYPE: M DIFFICULTY: 1 SECTION: 13.1 5. The amount of money that a firm pays to buy inputs is called a. total cost. b. variable cost. c. marginal cost. d. fixed cost. ANSWER: a. total cost. TYPE: M DIFFICULTY: 1 SECTION: 13.1 113
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114 Chapter 13 /The Costs of Production 6. Profit is defined as a. net revenue minus depreciation. b. total revenue minus total cost. c. average revenue minus average total cost. d. marginal revenue minus marginal cost. ANSWER: b. total revenue minus total cost. TYPE: M DIFFICULTY: 1 SECTION: 13.1 7. Which of the following can be added to profit to obtain total revenue? a. net profit b. capital profit c. operational profit d. total cost ANSWER: d. total cost TYPE: M DIFFICULTY: 2 SECTION: 13.1 8. Economists normally assume that the goal of a firm is to (i) make profit as large as possible even if it means reducing output. (ii) make profit as large as possible even if it means incurring a higher total cost. (iii) make revenue as large as possible. a.
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This note was uploaded on 06/13/2011 for the course ECON 2252 taught by Professor Byrd during the Spring '11 term at Troy.

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ch13 - Chapter13 TheCostsofProduction MULTIPLECHOICE 1.

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