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WorksheetsAS RP YG - Profit Motive/Consequences of Welfare 11+12
Total questions: 30
Worksheet time: 15mins
Name
Class
Date
1.
1. What economic actor supplies goods and services in the economy?
a)
a. free trade
b)
b. capital
c)
c. the government
d)
d. the firm
e)
e. the market
2.
2. A firm’s goal is to
a)
a. maximize social welfare
b)
b. maximize revenue
c)
c. maximize profits
d)
d. minimize costs
e)
e. minimize deadweight loss
3.
3. Accounting costs do NOT include
a)
a. input costs
b)
b. opportunity costs
c)
c. capital costs
d)
d. fixed costs
e)
e. labor costs
4.
4. Suppose Jackson is the owner of a local ice cream shop. His economic profit is $
a)
a. $0
b)
b. $1,000
c)
c. $100
d)
d. $500
e)
e. $200
5.
5. Ursula runs a bread shop. Which of the following costs are NOT fixed?
a)
a. the insurance premiums on her shop
b)
b. the rental cost of her sho p
c)
c. the cost of her equipment
d)
d. the opportunity cost of her time
e)
e. the wages of her employees
6.
6. Marginal cost is calculated as
a)
a. total fixed costs divided by quantity produced
b)
b. total variable costs divided by quantity produced
c)
c. change in total costs divided by change in quantity produced
d)
d. total variable costs divided by change in quantity produced
e)
e. total fixed costs less total variable costs
7.
7. Why PRIMARILY is it common to see increasing marginal costs as output increases?
a)
a. In the s hort run, some factors of production are fixed.
b)
b. The fixed costs are spread over more units of production.
c)
c. Marginal revenue decreases as output increases.
d)
d. An increase in demand for inputs results in higher input prices.
e)
e. As producers buy in bulk, the per unit price increases.
8.
8. Bob’s sandwich shop operates in a perfectly competitive market. What MUST be true?
a)
a. Bob faces a perfectly elastic demand curve.
b)
b. Bob faces increasing returns to scale.
c)
c. Bob’s marginal cost is constant.
d)
d. Bob’s supp ly curve is downward sloping.
e)
e. Bob’s marginal revenue is decreasing.
9.
9. A coffee shop faces diminishing returns to scale. If marginal revenue is $
a)
a. lay off workers
b)
b. maintain output
c)
c. lower fixed costs
d)
d. shut down operations
e)
e. increase coffee production
10.
10. An upward sloping supply curve is MOST associated with
a)
a. decreasing marginal revenue
b)
b. decreasing marginal costs
c)
c. negative economic profits
d)
d. diminishing returns to scale
e)
e. a horizontal deman d curve F OCUSED Q UIZ 11 P AGE 22 OF 80 D EMI D EC R ESOURCES ©2022
11.
11. Ben's lemonade store operates in a perfectly competitive market. Suppose his marginal revenue is $4 and his marginal cost is $4. It is most likely that Benjamin is
a)
a. facing increasing returns to scale
b)
b. producing at the profit-maximizing quantity
c)
c. facing a downward sloping demade curve
d)
d. earning a positive economic profit
e)
e. earning zero economic profit
12.
12. Employing more workers at a potato chip factory is an example of
a)
a. increasing fixed costs
b)
b. increasing social welfare
c)
c. increasing variable costs
d)
d. diminishing returns to scale
e)
e. increasing marginal revenue
13.
13. Which of the following conditions is MOST likely true if a firm has negative accounting profit in a competitive market?
a)
a. Total cost exceeds total re venue.
b)
b. Marginal revenue is greater than marginal cost.
c)
c. Marginal cost exceeds total cost.
d)
d. New firms are entering the market.
e)
e. Economic profit is zero.
14.
14. Suppose a firm operates in a perfectly competitive market. Which of the following variables is LEAST likely to vary with output?
a)
a. total cost
b)
b. consumer surplus
c)
c. total revenue
d)
d. marginal revenue
e)
e. variable cost
15.
15. Suppose when Ursula increases her production from 75 loaves to 100 loaves her total costs increase from $472 to $622. Of the $622, $250 comes from fixed costs. What is the marginal cost?
a)
a. $2.50
b)
b. $6
c)
7.5
d)
6.22
e)
e.. $10
16.
1. Unlike firms in perfectly competitive markets, firms in imperfectly competitive markets
a)
a. face a downward sloping demand curve
b)
b. earn positive accounting profit
c)
c. attempt to maximize economic profits
d)
d. face diminishing returns to scale
e)
e. take prices as given
17.
2. Market power is BEST defined as the ability to
a)
a. influence input costs
b)
b. increase production without affecting prices
c)
c. push competitors out of the market
d)
d. choose market prices
e)
e. allocate resources between different activities
18.
3. Which of the following factors MOST enables monopolies to arise?
a)
a. price discrimination
b)
b. increasing marginal costs
c)
c. Pareto inefficiency
d)
d. barr iers to entry
e)
e. deadweight loss
19.
4. How did DeBeers become a monopoly?
a)
a. It outperformed all of its competitors.
b)
b. It secured ownership of a key resource.
c)
c. It patented its product.
d)
d. It engaged in horizontal integration.
e)
e. It purchased exclusive righ ts from the government.
20.
5. A copyright would MOST likely protect the product of a(n)
a)
a. supplier of electricity
b)
b. independent author
c)
c. law firm
d)
d. e - commerce conglomerate
e)
e. diamond company
21.
6. Patents granted to new inventions expire after
a)
a. fifty years
b)
b. twenty years
c)
c. one hundred years
d)
d. five years
e)
e. ten years
22.
7. Which of the following markets is MOST prone to natural monopoly?
a)
a. the railroad industry
b)
b. the diamond industry
c)
c. the cereal industry
d)
d. the Hollywood film industry
e)
e. the book industry
23.
8. Natural monopolies are MOST associated with
a)
a. a small group of suppliers
b)
b. large fixed costs
c)
c. intellectual property protections
d)
d. price discrimination
e)
e. increasing average costs
24.
9. The profit - maximizing quantity for monopolies is located at the point at which
a)
a. marginal revenue equals zero
b)
b. total revenue equals total cost
c)
c. marginal revenue equals marginal cost
d)
d. demand intersects marginal cost
e)
e. demand intersects supply
25.
10. The price that monopolies charge in equilibrium is
a)
a. equal to average cost
b)
b. greater than marginal revenue
c)
c. equal to marginal cost
d)
d. the price that maximizes revenue
e)
e. less than marginal cost
26.
11. Compared to perfect competition, monopolies supply
a)
a. a lower quantity at a higher price
b)
b. a lower quantity at a lower price
c)
c. a higher quantity at a higher price
d)
d. the same quantity at a higher price
e)
e. a higher quantity at a lower price F OCUSED Q UIZ 12 P AGE 24 OF 80 D EMI D EC R ESOURCES ©2022
27.
12. NewMedia Co. operates in a monopoly. It is MOST likely that
a)
a. NewMedia experiences decreasing marginal costs
b)
b. NewMedia’s marginal revenue is decreasing
c)
c. NewMedia’s economic profit is zero
d)
d. NewMedia charges a price equal to marginal revenue
e)
e. NewMedia is regulated by the government
28.
13. Suppose a monopoly decides to increase output. What MUST be true?
a)
a. Pri ce decreases.
b)
b. Change in revenue equals price times additional demand.
c)
c. Consumer surplus decreases.
d)
d. Barriers to entry decrease.
e)
e. Deadweight loss increases.
29.
14. A monopoly's total revenue increases from $4800 to $7500 when it lowers its prices from $16-$15. What is the marginal revenue?
a)
a. $16
b)
b. 13.50
c)
c. $15
d)
d. $11
e)
e. $20
30.
15. Cable television is an example of a
a)
a. government - created monopoly
b)
b. natural monopoly
c)
c. copyright monopoly
d)
d. social monopoly
e)
e. quasi - monopoly
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