Economics Quiz: Cost Analysis and Profit Maximization

What is the fixed cost of the firm when the quantity produced is zero?

• $7

• $27

• $20

• $0

How is the marginal cost of the first unit calculated?

• By adding fixed cost to variable cost

• By dividing the change in total cost by the change in quantity

• By subtracting fixed cost from total cost

• By multiplying the price by the quantity

At what quantity does the firm maximize its profit if the price is $20?

• 6 units

• 5 units

• 4 units

• 3 units

What happens to the number of firms in the long run if there is profit?

• Firms will leave the market

• Firms will enter the market

• The number of firms will remain the same

• Firms will merge

What is the long-run effect of a $2 tax in a constant cost industry?

• The quantity produced will increase

• The quantity produced will decrease

• There will be no change in the long run

• Firms will permanently exit the market