Chapter 11
Chapter 11
Use the following to answer questions 1-2:
Table: Barrels of Oil
Barrel of Oil
Produced
1
2
3
4
5
6
7
8
9
10
Total Revenue
$50
100
150
200
250
300
350
400
450
500
Total Cost
$4
10
21
38
61
90
126
176
266
390
Price
$50
50
50
50
50
50
50
50
50
50
1. (Table: Barrels of Oil) Refer to the table. How many barrels of oil should the company produce to maximize profit?
A) 6
B) 7
C) 8
D) 9
2. (Table: Barrels of Oil) Refer to the table. What is the marginal revenue of producing the fifth barrel of oil?
A) 61
B) 50
C) 200
D) 250
3. Stating that TR = TC is equivalent to stating that:
A) MR = MC.
B) P = AC.
C) P = Average fixed cost.
D) MR = P.
Page 1
4. At a ski resort located over one hour from the nearest large town, there is only one grocery store and it charges prices more than 200 percent above the typical retail prices. In the long run, we would expect that:
A) another store will open that will charge equally high prices since competition is low.
B) the store will continue to earn high profits even in the long run since the size of the market is small.
C) demand will decrease since people will not want to pay the high prices.
D) another store will open that will charge lower prices.
5. (Figure: AC) Refer to the set of four panels in the figure. Which of the panels shows the typical shape of the average cost curve in a competitive market?
Figure: AC
A)
B)
C)
D)
Panel A
Panel B
Panel C
Panel D
6. Which of the following statements is correct?
A) When the marginal cost curve is above the average cost curve, the average cost curve must be rising.
B) When the marginal cost curve is below the average cost curve, the average cost curve must be rising.
C) When MR = MC, the average cost curve is at its minimum point.
D) When MR = P, the average cost curve is at its minimum point.
Page 2
7. Marginal cost is:
A) the change in total cost from producing one more unit of output.
B) total cost divided by the change in total output.
C) the change in total output
Use the following to answer questions 1-2:
Table: Barrels of Oil
Barrel of Oil
Produced
1
2
3
4
5
6
7
8
9
10
Total Revenue
$50
100
150
200
250
300
350
400
450
500
Total Cost
$4
10
21
38
61
90
126
176
266
390
Price
$50
50
50
50
50
50
50
50
50
50
1. (Table: Barrels of Oil) Refer to the table. How many barrels of oil should the company produce to maximize profit?
A) 6
B) 7
C) 8
D) 9
2. (Table: Barrels of Oil) Refer to the table. What is the marginal revenue of producing the fifth barrel of oil?
A) 61
B) 50
C) 200
D) 250
3. Stating that TR = TC is equivalent to stating that:
A) MR = MC.
B) P = AC.
C) P = Average fixed cost.
D) MR = P.
Page 1
4. At a ski resort located over one hour from the nearest large town, there is only one grocery store and it charges prices more than 200 percent above the typical retail prices. In the long run, we would expect that:
A) another store will open that will charge equally high prices since competition is low.
B) the store will continue to earn high profits even in the long run since the size of the market is small.
C) demand will decrease since people will not want to pay the high prices.
D) another store will open that will charge lower prices.
5. (Figure: AC) Refer to the set of four panels in the figure. Which of the panels shows the typical shape of the average cost curve in a competitive market?
Figure: AC
A)
B)
C)
D)
Panel A
Panel B
Panel C
Panel D
6. Which of the following statements is correct?
A) When the marginal cost curve is above the average cost curve, the average cost curve must be rising.
B) When the marginal cost curve is below the average cost curve, the average cost curve must be rising.
C) When MR = MC, the average cost curve is at its minimum point.
D) When MR = P, the average cost curve is at its minimum point.
Page 2
7. Marginal cost is:
A) the change in total cost from producing one more unit of output.
B) total cost divided by the change in total output.
C) the change in total output