1.
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Resources, as defined broadly by economists, are
A.
land and labor.
B.
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land, labor, and
workers.
C.
land, workers, and
firms.
D.
capital, land, and
natural resources.
E.
land, labor, and capital.
2.
The transformation of resources into economic goods and services
is called
A.
technical
efficiency.
B.
resourcing.
C.
production.
D.
increasing returns.
E.
output.
3.
In economic theory, economists use the circular flow diagram to describe
A.
consumers who lack
any preference.
B.
an indifference
curve.
C.
the relationship between output and resources.
D.
the household
sector.
E.
the business sector.
4.
Marginal physical product is
A.
always increasing.
B.
the maximum output
that can be produced from different quantities of a variable resource.
C.
the maximum output
that can be produced from different quantities of a fixed resource.
D.
the additional output produced from one more unit of
a variable resource, holding other inputs constant.
E.
None of the above.
5.
Which of the following statements best represents the definition
of marginal physical product?
A.
The additional quantity that is produced when one
additional unit of a resource is used in combination with the same
quantities of all other resources
B.
The total quantity
that is produced when one additional unit of a resource is used in
combination with the same quantities of all other resources
C.
The total quantity
that is produced when all additional units of a resource are used in
combination with the same quantities of all other resources
D.
The total amount
produced in a specified time period
E.
The additional
quantity that is produced when all combinations of a resource are tried as
an experiment
6.
Every firm (and every individual and nation as well) is faced
with the law of diminishing marginal returns. The law is a physical property
rather than an economic one, but it is important to economics because
A.
it defines the
relationship between costs and output in the long run.
B.
it defines the relationship between costs and output
in the short run.
C.
it defines the
relationship between average costs and output in the long run.
D.
it defines the
relationship between marginal costs and output in the long run.
E.
it defines the
relationship between total revenue and output in the long run.
7.
For any firm, it is always true that
A.
as output rises, average fixed costs decline because
the total fixed cost is divided by a larger and larger number of units
produced.
B.
as output rises,
average fixed costs rise equally because of more intense resource
utilization.
C.
as output rises,
average fixed costs quickly drop to zero.
D.
as output rises,
average fixed costs become a vertical line.
E.
as output rises,
average fixed costs decline and ultimately become negative.
8.
Average fixed cost
A.
is constant as
output rises.
B.
decreases as output rises.
C.
increases with
rising output and then declines.
D.
intersects with
average variable cost at the lowest average variable cost.
E.
equals marginal cost
at the lowest point of marginal cost.
9.
Overhead costs are
A.
identical to fixed
costs.
B.
the costs of
variable inputs.
C.
those costs that are not directly attributable to the
production process.
D.
the costs of labor
inputs in the short run but not in the long run.
E.
the costs associated
with getting in over your head.
10.
The sum of the prices that firms must pay for resources used in
production times the quantity of resources used, for each quantity of output
produced, is known as the firmâs
A.
total resource schedule.
B.
total physical
product schedule.
C.
average physical
product schedule
D.
total cost schedule.
E.
average total cost
schedule.
Quiz Chapter 9
1.
A firmâs decision to supply a good or service
A.
depends on total
cost only.
B.
depends on total
revenue only.
C.
depends on past
profit of other firms in the industry.
D.
depends on expected profit.
E.
cannot be studied
with the tools of economics.
2.
The addition to a business firmâs total receipts (revenue) that
comes from selling one more unit of output is
A.
total costs.
B.
normal profit.
C.
marginal costs.
D.
marginal revenue.
E.
total revenue.
3.
To produce where marginal cost is equal to marginal revenue is
called
A.
the marginal-revenue
rule.
B.
the marginal-cost
rule.
C.
the profit-maximizing rule
D.
breaking the rules.
E.
being forced out of
business.
4.
The additional cost a firm acquires from selling an extra unit
of output is
A.
total cost.
B.
marginal cost.
C.
average cost.
D.
fixed cost.
E.
variable cost.
5.
In general, the two extreme cases of market structure models are
represented by
A.
monopolistic
competition and oligopoly.
B.
oligopoly and
monopoly.
C.
oligopoly and
perfect competition.
D.
perfect competition and monopoly.
E.
perfect monopoly and
oligopolistic competition.
6.
Firms operating in a perfectly competitive market are price
takers because
A.
they have a lot of
market power.
B.
they are unable to set a price that differs from the
market price without losing profit.
C.
they choose to set a
price that differs from the market price but do not lose profit.
D.
they choose to set a
price that differs from the market price in order to gain market share.
E.
in a perfectly
competitive market, price is dictated through various government agencies.
7.
If an industry has no barriers to entry, no product promotion
strategy, a standardized product type, and a very large number of firms
operating within it, the industry can be said to have
A.
a monopoly market
structure.
B.
perfect competition.
C.
differentiated
market.
D.
monopolistic
competition.
E.
an oligopoly market
structure.
8.
Monopoly is a market structure
A.
in which there is just one firm and entry by other
firms is not possible.
B.
in which consumers
have many places to buy the good.
C.
in which there are a
large number of close substitutes for the good.
D.
that is
characterized by ease of entry.
E.
that is
characterized by large expenditures on advertising.
9.
A(n) __________ may offer products that are either
differentiated or nondifferentiated.
A.
monopolistically
competitive firm
B.
price taker
C.
oligopolistic firm
D.
perfectly
competitive firm
E.
monopoly
10.
Regardless of market structure, firms maximize profits where
A.
P=MR
B.
P=MC
C.
MR=MC
D.
MC=AC
E.
TR=TC
Chapter 10 Quiz
1.
The model of perfect competition best applies to markets with
A.
a few firms selling
identical products.
B.
a few firms selling
differentiated products.
C.
many firms selling identical products.
D.
many firms selling
identical products.
E.
significant barriers
to entry and exit.
2.
Since computer chip manufacturers, agriculture, and scrap metal
processors are all industries that closely resemble perfect competition, the
producers within each of these industries are considered to be
A.
price takers.
B.
price makers.
C.
price searchers.
D.
price maximizers.
E.
price minimizers.
3.
If a perfectly competitive firm lowers its price,
A.
it will be able to
gain more customers.
B.
its profit will
increase because demand is elastic.
C.
it will lose all of
its customers.
D.
its total revenue will decrease since it can already
sell as much as it produces at a higher price.
E.
All of the above.
4.
The demand curve of an individual firm in a perfectly
competitive market structure is always
A.
perfectly inelastic.
B.
elastic.
C.
unit elastic.
D.
perfectly elastic.
E.
inelastic.
5.
In the short run, a perfectly competitive firm maximizes profit
where
A.
marginal revenue
equals marginal cost.
B.
price equals
marginal cost.
C.
the short-run
average-total-cost curve reaches a minimum.
D.
price equals
marginal revenue
E.
Both a. and b.
6.
Economic profits are earned
A.
when price is less
than average fixed cost.
B.
when price exceeds average total cost.
C.
by perfectly
competitive firms in the long run.
D.
when marginal
revenue equals marginal cost.
E.
when price equals
average variable cost.
7.
In order to continue producing in the short run, a firm must
earn sufficient revenue to pay
A.
at least some of its
variable costs.
B.
all of its variable costs.
C.
all of its fixed
costs.
D.
its total costs.
E.
the owner a
reasonable profit.
8.
In the long run in a perfectly competitive market,
A.
all firms can vary
all of their resources.
B.
firms will shut down
permanently if TR is less than TC.
C.
the number of firms
can vary.
D.
entry and exit of
firms can occur.
E.
All of the above.
9.
If economic profits exist in a perfectly competitive market,
then
A.
firms will enter the
market in the short run.
B.
firms will enter the market in the long run.
C.
firms will exit the
market in the short run.
D.
firms will exit the
market in the long run.
E.
there will be no
change in the number of firms in the market.
10.
âCommoditizationâ occurs when
A.
firms spend too much
on advertising expenditures.
B.
firms devote more
resources to differentiating their products from rivals.
C.
the exit of firms
increases.
D.
as time goes on, a firmâs product begins to have more
and more substitutes and the product becomes increasingly standardized.
E.
the firm becomes a
commodity.
Chapter
11 Quiz
1.
Which of the following is an example of a
monopoly?
A.
Postal services in
most nations are run by the government.
B.
Cable television
service in most areas is provided by a single company.
C.
In most nations,
money is printed by the central bank.
D.
Electricity is
delivered to your house by a single utility company.
E.
All of the above
2.
The reason that economies of scale can be a
barrier to entry is that
A.
the smaller the
production facility is, the lower the per-unit cost to produce is.
B.
the larger the
production facility is, the higher the per-unit cost to produce is.
C.
the larger the production facility is, the lower the
per-unit cost to produce is.
D.
small plants are
always more efficient than large plants.
E.
the lack of
exclusive ownership of essential resources.
3.
Marginal revenue is equal to
A.
average revenue
divided by quantity.
B.
total revenue
divided by quantity.
C.
the change in total revenue divided by the change in
quantity.
D.
the change in
average revenue divided by the change in quantity.
E.
the demand curve in
a monopolistic market.
4.
If a monopolist is producing at a level of
output at which marginal revenue equals marginal cost,
A.
then the monopolist is maximizing profit.
B.
then the monopolist
is earning positive economic profit.
C.
then the monopolist
is charging a price equal to marginal cost.
D.
All of the above
E.
None of the above
5.
Suppose that a monopolist produces at a profit-maximizing
level of output at which the demand curve is just tangent to the
average-total-cost curve. In such a situation,
A.
price is equal to
marginal cost.
B.
the firm is
producing at the minimum point of the average-total-cost curve.
C.
the firm is earning zero economic profits.
D.
the firm is earning
positive economic profits.
E.
the firm is earning
negative economic profits.
6.
The market supply in a monopoly is
A.
vertical.
B.
horizontal.
C.
downward sloping.
D.
the same as the monopoly firmâs supply.
E.
None of the above
7.
If a monopolist is producing at that output at
which price is less than average total cost, then the firm will
A.
have to shut down
permanently.
B.
incur an economic loss.
C.
earn both a positive
economic profit and a normal profit.
D.
earn only a normal
profit.
E.
earn a positive
economic profit.
8.
A price discriminating monopolist
A.
produces quality
products only.
B.
does not sell
products to minority groups.
C.
must have a very
large operation.
D.
sells the same product in different markets at
different prices.
E.
would not engage in
dumping.
9.
The monopoly market structure
A.
does not yield efficiency.
B.
is efficient in the
short run only.
C.
is efficient in the
long run only.
D.
is efficient in both
long and short runs.
E.
is inefficient
because price equals marginal cost in the long run.
10.
Which of the following is not characteristic
of a monopoly?
A.
It is a market
structure.
B.
A monopolist is the
sole supplier of a product.
C.
The monopolistâs
product has no close substitutes.
D.
To remain a
monopoly, there must be barriers to entry.
E.
Monopolists are price takers.
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