AP Mico Unit 3 Quiz

If the market price is $10, how many widgets should this profit-maximizing firm produce?

• 3,000

• 6,000

• 12,000

• 16,000

• 21,000

The following questions refer to the graph below showing cost curves for a perfectly competitive firm. At market price $6, the profit-maximizing rate of output will result in 4MI31.

• economic profits

• economic losses

• normal profits

• profits that are less than normal

• profits that are greater than normal

The relationship in the graph above best illustrates the economic concept of 4MI39.

• opportunity cost

• diminishing marginal utility in consumption

• diminishing marginal returns in production

• production possibilities

• comparative advantage

According to the cost schedule in the table above, the firm’s total fixed cost is 4MI38.

• increasing

• decreasing

• $90

• $100

• impossible to determine

A profit-maximizing firm will shut down in the short run any time the firm’s total revenue is less than its 4MI33.

• total cost

• fixed cost

• total variable cost

• explicit cost

• implicit cost

Assume that a firm is maximizing short-run profits and that price is greater than average variable cost. Which of the following must be true at the firm’s level of output?

• Marginal revenue is equal to average total cost.

• Marginal revenue is greater than total variable cost.

• Marginal revenue is equal to price, which is greater than average total cost.

• Marginal revenue is equal to marginal cost.

• Price is equal to average total cost.

Which of the following MUST be true of the long run? 4MI36

• It is at least one year in duration.

• All factors of production are variable.

• At least one factor of production is fixed.

• Marginal costs are constant.

• Average total costs are constant.

A farmer grows wheat using two inputs: labor and land whose prices are constant. If she doubles her inputs, she finds that the quantity of wheat produced more than doubles. Therefore, it must be true that in this output range her long-run average total cost curve is 4MI37

• upward sloping

• downward sloping

• horizontal

• vertical

• U-shaped

Which of the following is true for a firm that uses labor as a variable input and capital as a fixed input in the short run? 4MI310

• If the marginal product of labor is negative, the average product of labor must also be negative.

• If the marginal product of labor is rising, the average product of labor must be greater than the marginal product of labor.

• If the average product of labor is rising, the marginal product of labor must be rising.

• If the average product of labor is falling, the marginal product of labor must be less than the average product of labor.

• The average product of labor can never be equal to the marginal product of labor.