Exam 8: How Firms Make Decisions: Profit Maximization

A) is the profit it earns by producing and selling a particular quantity of output
B) varies as output varies along the demand curve the firm faces
C) is constant at all points along a fixed demand curve
D) is determined by subtracting total profit from total cost
E) always decreases as its output increases,because costs rise

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A) marginal revenue is negative
B) marginal revenue is positive
C) marginal cost is negative
D) average revenue is negative
E) total costs exceed total revenue

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A) it must be experiencing an accounting loss
B) it should stay in business if it can cover its fixed costs
C) the market must be too large
D) it should exit from the industry
E) price exceeds marginal cost

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A) less than its marginal cost
B) greater than price
C) less than price
D) equal to price
E) equal to its total revenue

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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
D) maximum price at which the firm will demand any given quantity of output
E) minimum quantity of output the firm can sell at any given price

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A) $90
B) $70
C) $50
D) $30
E) $10

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A) total revenue is smaller than total cost
B) marginal revenue exceeds marginal cost
C) marginal revenue equals marginal cost
D) marginal revenue is smaller than marginal cost
E) total revenue equals total cost

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A) $94,400
B) $79,400
C) $4,400
D) $3,500
E) $19,400

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A) decrease output
B) increase output
C) leave output at four cabinets per week
D) either increase or decrease output,depending on its level of fixed costs
E) either increase or decrease output,depending on its level of variable costs

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A) $300
B) $40
C) $60
D) $20
E) $10

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A) 2 manicures per day
B) 3 manicures per day
C) 4 manicures per day
D) 5 manicures per day
E) 6 manicures per day

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A) economic profit after taxes
B) total revenue
C) total opportunity cost
D) total implicit cost
E) money profit after taxes

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A) accounting and economic profit are equal
B) opportunity costs of production are zero
C) explicit costs of production are small
D) accounting profit will exceed economic profit
E) economic profit will exceed accounting profit

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A) equal $30
B) equal $29
C) be between $30 and $29
D) be less than $29
E) exceed $30

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A) is constant regardless of how much output the firm produces
B) decreases as the firm produces more output
C) increases as the firm produces more output
D) decreases if the firm produces less output
E) is less than price at most possible output levels

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A) expand output when MR < MC
B) reduce output when MR > MC
C) expand output when TR > TC
D) reduce output when TR > TC
E) expand output when MR > MC

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A) 150 units
B) 80 units
C) 50 units
D) less than 50 units
E) between 50 and 80 units

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