studyguide_for_ch7

studyguide_for_ch7 - Outline of Ch7 1. Describe the...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Outline of Ch7 1. Describe the constraints faced by firms. 2. Use both the total revenue/total cost approach and the marginal revenue/marginal cost approach to explain how a firm finds its profit-maximizing output level. 3. Explain how a firm deals with economic losses in the short run (the shutdown rule). 4. Explain how a firm deals with economic losses in the long run (the exit decision). Sample Questions: 1. Myron worked at a factory where he earned $20,000 per year. One day, he quit his job and opened a bumper sticker business. After one year, his business earned $60,000 in sales revenue and he incurred $30,000 in direct business expenses. If he received no salary from the new business, what is his economic profit? a. $10,000 b. $30,000 c. $60,000 d. $20,000 e. $50,000 ANS: A 2. The demand curve facing a firm shows the a. maximum price the firm can charge and still sell any given amount of output b. minimum price the firm can charge and still sell any given amount of output c. minimum price at which the firm will demand any given quantity of output
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

studyguide_for_ch7 - Outline of Ch7 1. Describe the...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online