MA52 Unit 6 Review Part 2

George is trying to decide if his company should increase its production. To get an accurate idea of whether to increase production, he should 

prepare a graph that illustrates which components?

• Marginal cost and marginal revenue

• Total cost and total revenue

• Marginal cost and total revenue

• Marginal revenue and total cost

Businesses follow the law of diminishing returns in order to combine the right amount of variable resources to achieve production levels that 

perform which activity?

• Control budgets

• Increase expenses

• Maximize profits

• Restrict revenues

To calculate total revenue, a business multiplies the number of units sold by which other component or components?

• Fixed costs

• Marginal revenue

• Average price per unit

• Marginal cost

According to the law of diminishing returns, continuing to hire additional employees will eventually cause the production to change to which 

situation? 

• Decrease

• Level off

• Increase

• Remain unchanged

Past sales records show that sales increased at a clothing store when a 10th rack of clothing was added to the store floor. However, when an 11th rack is added, sales increased by only 1%. In economics, this is 

explained by which concept? 

• The private enterprise system 

• The concept of competition 

• The law of diminishing returns 

• The economies of scale

Major Company hired a fifth employee and production increased by 1,000 units per week, so it hired a sixth employee and production increased by an additional 900 units per week. What should the company expect to 

happen if it continues to hire more employees and does nothing to the work environment?

• Level of production will increase proportionately. 

• Production per employee will fluctuate. 

• Production per employee will become more stable. 

• Production per employee will decrease. 

When inflation levels are low, businesses often consider performing 

which action?

• Increasing interest rates 

• Reducing their personnel 

• Decreasing outputs 

• Expanding their operations

What is one way that price stability indicates the condition of the 

economy?

• Increase in the money supply

• Reduction in taxes and spending  

• Absence of inflation or deflation 

• Decrease in consumer buying power

Which situation would occur as a result of discoveries?

• Economic activities contract. 

• New jobs are created. 

• Money supply decreases. 

• Production levels decrease.

What is one reason why the overall unemployment rate understates the actual employment situation?

• Underemployed people are listed. 

• The rate is not seasonally adjusted. 

• Discouraged workers are not included. 

• The rate reflects regional differences.