Mod 58 Practice Quiz
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1. At what level of output does the firm maximize profit?
2. At the profit-maximizing quantity of output, is the firm profitable, does it just break even, or does it earn a loss?
3. At what output does diminishing marginal returns begin?
a. 0 to 1
b. 1 to 2
c. 2 to 3
d. 3 to 4
e. 4 to 5
4. Which curve represents the firms short run supply curve?
5. A perfectly competitive firm will maximize profit at the quantity at which the firm’s marginal revenue equals
b. average revenue
c. total cost
d. marginal cost
6. Which of the following is correct for a perfectly competitive firm? I. The marginal revenue curve is the demand curve. II. The firm maximizes profit when price equals marginal cost. III. The market demand curve is horizontal.
a. I only
b. II only
c. III only
d. I & II only
e. I, II, & III
7. A firm is profitable if
a. TR < TC
b. AR < ATC
c. MC < ATC
d. ATC < P
e. ATC > MC
8. If a firm has a total cost of $200, its profit-maximizing level of output is 10 units, and it is breaking even (that is, earning a normal profit), what is the market price?
9. What is the firm’s profit if the price of its product is $5 and it produces 500 units of output at a total cost of $1,000?
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