1. If a perfectly competitive wheat farmer is maximizing its profit and then inc
ID: 1099421 • Letter: 1
Question
1. If a perfectly competitive wheat farmer is maximizing its profit and then increases its output, the farmer's
A. marginal revenue increases, but so does marginal cost so that the farmer's total profit increases.
B. total revenue and total cost both rise but the effect on the farmer's total profit is uncertain.
C. total revenue decreases and total cost increases, both thereby decreasing the farmer's total profit.
D. total revenue does not change but total cost increases, thereby decreasing the farmer's total profit.
E. total revenue increases, but total cost rises by more so that the farmer's total profit decreases.
2. Marginal revenue is
A. the change in total revenue from a one-unit increase in the quantity sold.
B. the change in total cost from producing an additional unit of output.
C. the economic profit from producing an additional unit of output.
D. another name for total revenue.
E. less than price for a perfectly competitive firm.
3. When a nation exports a good or service in which it has a comparative advantage, production of the good or service
A. decreases.
B. might change, but more information about what else the country exports is needed to determine if production increases, decreases, or does not change.
C. increases.
D. stays the same.
E. might change, but more information about what the country imports is needed to determine if production increases, decreases, or does not change
4. Accountants calculate
A. depreciation using Internal Revenue Service rules.
B. economic depreciation as part of the firm's cost.
C. the opportunity cost of all the resources the firm uses.
D. all the firm's implicit costs but only a few of its explicit costs.
E. All of the other choices answers are correct.
5. For a perfectly competitive firm, the price of its good is equal to the firm's marginal revenue because
A. individual perfectly competitive firms cannot influence the market price by changing their output.
B. the firm's total revenue cannot be changed by anything the firms can do.
C. information about price changes is hard to come by for small sellers.
D. there are only a small number of firms in the market.
E. price and marginal revenue are the same economic concepts.
6. A major characteristic of monopoly is that
A. competition is intense.
B. no barriers to entry exist.
C. a barrier to entry keeps out competitors.
D. the product is identical to that produced by other companies.
E. a few firms compete with each other.
7. A perfectly competitive firm maximizes its profit by producing at the point where
A. total cost is at its minimum.
B. total revenue is equal to marginal revenue.
C. total revenue equals total cost.
D. total revenue is at its maximum.
E. marginal revenue is equal to marginal cost.
Explanation / Answer
1. If a perfectly competitive wheat farmer is maximizing its profit and then increases its output, the farmer's
A. marginal revenue increases, but so does marginal cost so that the farmer's total profit increases.
B. total revenue and total cost both rise but the effect on the farmer's total profit is uncertain.
C. total revenue decreases and total cost increases, both thereby decreasing the farmer's total profit.
D. total revenue does not change but total cost increases, thereby decreasing the farmer's total profit.
E. total revenue increases, but total cost rises by more so that the farmer's total profit decreases.
2. Marginal revenue is
A. the change in total revenue from a one-unit increase in the quantity sold.
B. the change in total cost from producing an additional unit of output.
C. the economic profit from producing an additional unit of output.
D. another name for total revenue.
E. less than price for a perfectly competitive firm.
3. When a nation exports a good or service in which it has a comparative advantage, production of the good or service
A. decreases.
B. might change, but more information about what else the country exports is needed to determine if production increases, decreases, or does not change.
C. increases.
D. stays the same.
E. might change, but more information about what the country imports is needed to determine if production increases, decreases, or does not change
4. Accountants calculate
A. depreciation using Internal Revenue Service rules.
B. economic depreciation as part of the firm's cost.
C. the opportunity cost of all the resources the firm uses.
D. all the firm's implicit costs but only a few of its explicit costs.
E. All of the other choices answers are correct.
5. For a perfectly competitive firm, the price of its good is equal to the firm's marginal revenue because
A. individual perfectly competitive firms cannot influence the market price by changing their output.
B. the firm's total revenue cannot be changed by anything the firms can do.
C. information about price changes is hard to come by for small sellers.
D. there are only a small number of firms in the market.
E. price and marginal revenue are the same economic concepts.
6. A major characteristic of monopoly is that
A. competition is intense.
B. no barriers to entry exist.
C. a barrier to entry keeps out competitors.
D. the product is identical to that produced by other companies.
E. a few firms compete with each other.
7. A perfectly competitive firm maximizes its profit by producing at the point where
A. total cost is at its minimum.
B. total revenue is equal to marginal revenue.
C. total revenue equals total cost.
D. total revenue is at its maximum.
E. marginal revenue is equal to marginal cost.
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