Question

Which of the following statements is true about profit, revenue and cost?

	A.	In economics, π means “profit”.
	B.	Profit equals to revenue minus cost.
	C.	π = R – C
	D.	All above are true

  

QUESTION 2

The relationship between quantity of input and total quantity of output is _____________

	A.	Production function.
	B.	Total cost function.
	C.	Total revenue curve.
	D.	Marginal production curve.

0.4 points   

QUESTION 3

Which of the following statements is true about Diminishing marginal product ?

	A.	Marginal product of an input declines as the quantity of the input rises.
	B.	The curve of production function gets steeper as production rises
	C.	The curve of production function gets flatter as production falls
	D.	It never happens in the real world

0.4 points   

QUESTION 4

Which of the following statements is NOT true about total cost curve (cost function)?

	A.	It is the relationship between quantity produced and total costs
	B.	It can be derived from the production function by switching the horizontal and vertical axis
	C.	It can be derived from the production function because these two functions are identical
	D.	Usually, it gets steeper as the amount produced rises, because of Diminishing marginal product

0.4 points   

QUESTION 5

Which of the following statements is NOT true about variable cost (VC)?

	A.	It is defined as the costs that vary with the quantity of output produced
	B.	It is always proportional to the output quantity
	C.	When output =0, VC=0.
	D.	VC is never greater than TC.

0.4 points   

QUESTION 6

Marginal cost curve _______________

	A.	is about the increase in total cost arising from an extra unit of production.
	B.	gets steeper as production rises
	C.	crosses the ATC curve at the minimum of it
	D.	All above are true

0.4 points   

QUESTION 7

Which of the following statements is NOT true about typical cost curves?

	A.	Marginal cost (MC) eventually rises with the quantity of output
	B.	Average variable cost (AVC) eventually rises with the quantity of output
	C.	Average-total-cost (ATC) curve is U-shaped
	D.	ATC and MC intersect at the minimum of MC

0.4 points   

QUESTION 8

In a competitive market, _______________

	A.	there are many buyers and sellers, and each of them is a price taker
	B.	buyers and sellers trade identical products
	C.	Firms can freely enter or exit the market
	D.	All above are true

0.4 points   

QUESTION 9

A competitive firm ___________

	A.	is one of the many firms in a competitive market.
	B.	must be very productive
	C.	sells advanced products and thus has advantages over its competitors
	D.	has greater influence on the price than other firms have.

0.4 points   

QUESTION 10

In economics and business, it is assumed that the behaviors of a competitive firm are always driven by _________

	A.	Revenue maximization
	B.	Cost minimization
	C.	Profit maximization
	D.	Competitiveness maximization

0.4 points   

QUESTION 11

For a competitive firm, marginal revenue ______________

	A.	always equals to price
	B.	does not always equal to average revenue
	C.	gets lower as production rises
	D.	All above are true

0.4 points   

QUESTION 12

Which of the following conditions CANNOT ensure that the profit of a competitive firm is maximized?

	A.	MR = MC
	B.	AR = MR
	C.	MC = P
	D.	AR = MC

0.4 points   

QUESTION 13

In a competitive market, price of the good is $5. A firm has produced 9 unites of the good and its marginal cost for the 10^th unit of production will be $3. Its current total revenue (9 units of production) is $ ________

	A.	45
	B.	50
	C.	27
	D.	18

0.4 points   

QUESTION 14

In a competitive market, price of the good is $5. A firm has produced 9 unites of the good and its marginal cost for the 10^th unit of production will be $3. If it continues to produce the 10^th unit and sell it, it total profit will ___________

	A.	decrease by $2
	B.	increase by $2
	C.	increase by $5
	D.	not change

0.4 points   

QUESTION 15

In a competitive market, price of the good is $5. A firm has produced 9 unites of the good and its marginal cost for the 10^th unit of production will be $3. If it continues to produce the 10^th unit and sell it, what is itstotal profit?

	A.	$20
	B.	$50
	C.	$0
	D.	we don’t have enough information to calculate it

0.4 points   

QUESTION 16

Competitive firm’s short-run supply curve is _____________

	A.	Its MC curve
	B.	The portion of its MC curve that lies above its AVC
	C.	The portion of its MC curve that lies above its ATC
	D.	None of the above is true

0.4 points   

QUESTION 17

Which of the following statements is true about sunk costs of a competitive firm?

	A.	They are part of the variable costs
	B.	Rational people ignore them when making long-run decisions
	C.	They are the portion of costs that have already been committed and cannot be recovered
	D.	In the short run, marginal cost is sunk cost

0.4 points   

QUESTION 18

For a competitive firm, if the price is higher than its AVC but lower than the bottom of its ATC, then ______________

	A.	it will shut down immediately
	B.	it will stay in the market in the long run
	C.	it stays in the market in the short run, but may exit the market in the long run
	D.	the firm can adjust the market price to make it higher

0.4 points   

QUESTION 19

For a competitive firm, which pair of curves never intersect each other when Q>0?

	A.	ATC and MC
	B.	ATC and AFC
	C.	AR and MC
	D.	MR and MC

0.4 points   

QUESTION 20

Competitive firm’s long-run supply curve is ______________

	A.	The portion of its MC curve that lies above ATC
	B.	Part of its MC curve
	C.	Part of its short-run supply curve
	D.	All above are true

Answer 1

QUESTION 1

Which of the following statements is true about profit, revenue and cost?

A. In economics, π means “profit”.

B. Profit equals to revenue minus cost.

C. π = R – C

D. All above are true

Answer – D. All the above is true. Economist use π to represent profit. Profit is also the difference between revenue and cost.

QUESTION 2

The relationship between quantity of input and total quantity of output is _____________.

Answer – A. Production Function.

Production function is the functional relationship between the quantity of input and quantity of output. It analyze the physical relationship between input and output.

QUESTION 3

Which of the following statements is true about Diminishing marginal product?

Answer – A. Marginal product of an input declines as the quantity of the input rises.

It is the property of the where the marginal product of an input declines as the quantity of the input increases

QUESTION 5

Which of the following statements is NOT true about variable cost (VC)?

Answer - B. It is always proportional to the output quantity

It is not a mandatory condition. And variable cost is not always proportional to the output.

QUESTION 6

Marginal cost curve _______________

Answer – D. All above are true

Marginal cost is the addition to the total cost when the producer producers one more additional unit. Also it gets steeper with the increase in output. It is crosses ATC and AVC at its minimum points.