ECON Chapter 8 Study Guide

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Posted on

May 24th, 2023

question

Herbert Simon has concluded that decision making in industry is often best described as

answer

satisficing

question

At a profit-maximizing output level

answer

all of the above

question

The demand curve for a firm's product is also the curve showing

answer

average revenue

question

A firm that is earning zero economic profit should go out of business.

answer

FALSE

question

Marginal, average, and total figures are bound together. If any two are known, the third can be calculated.

answer

TRUE

question

The average revenue curve can also be described as the demand curve.

answer

TRUE

question

When marginal cost exceeds marginal revenue

answer

marginal profit < 0

question

Average revenue is equal to

answer

TR/Q

question

In 1984, British Prime Minister Margaret Thatcher decided to shut down so-called "uneconomic" coal mines owned by the government. The National Union of Mineworkers protested, asserting that there was enough coal in the mines to continue current levels of production for years. Thatcher implicitly argued that her decision was economically sound because, at any practical level of output, for each "uneconomic" mine

answer

MC> MR

question

Company A manufactures a single automotive component. It had total revenue of $100,000 and an economic profit of $20,000. What is the price of the component it manufactures?

answer

($100,000/quantity sold)

question

A firm that sells at a price below average cost is losing money.

answer

TRUE

question

A firm can choose a quantity of output, and the price is then determined by

answer

consumers demand

question

In the case study discussed in the chapter, the electronics firm was losing money by selling its calculators at a price that was below average cost.

answer

FALSE

question

Price and output decisions are two aspects of the same choice.

answer

TRUE

question

It can be shown that average revenue and price are always equal.

answer

TRUE

question

The term "satisficing" for decision-making behavior by many firms was coined by

answer

Herbert Simon

question

The typical total profit graphical presentation is shown as

answer

a hill, or mound

question

In the case study discussed in the chapter, the electronics firm was actually enhancing its profits by selling calculators at a price that was below average cost.

answer

TRUE

question

By definition, a firm that practices satisficing

answer

makes acceptable decisions, though not necessarily optimal ones

question

Total profit is maximized where

answer

all of the above

question

Economists and accountants use the same definition of profit.

answer

FALSE

question

Net benefit is equal to total benefit minus marginal cost.

answer

FALSE

question

If total profit is at a maximum, then average profit is zero.

answer

FALSE

question

A firm's total profit is the difference between its sales and what it pays out in costs.

answer

TRUE

question

Any change in a firm's fixed costs will change its profit-maximizing level of output.

answer

FALSE

question

If a firm's marginal profit is negative, it should reduce its output level.

answer

TRUE

question

A grocery store sells soup for $1.50 a can, or $2.50 for two cans. To a customer, the marginal cost of buying the second can of soup is

answer

question

Firms can make decisions using marginal analysis even if they do not know the shape of a demand curve.

answer

TRUE

question

Marginal analysis is useful in economics, but not in other areas of life.

answer

FALSE

question

Joe and Ed go to a diner that sells hamburgers for $5 and hot dogs for $3. They agree to split the lunch bill evenly. Ed chooses a hot dog. The marginal cost to Joe then of ordering a hamburger instead of a hot dog is

answer

$2.50

question

Accounting profit is usually smaller than economic profit.

answer

FALSE

question

Price and quantity decisions made by a company have vital influences on

answer

all of the above are correct

question

If marginal cost is rising, then average cost must be rising.

answer

FALSE

question

Total revenue

answer

all of the above are correct

question

If the marginal profit of the next unit is negative, the firm should produce more output in order to generate greater profit.

answer

FALSE

question

A small business owner who is earning a positive economic profit, no matter how small, is doing better than if she sold her business and went to work for another firm.

answer

TRUE

question

Marginal cost curves and average cost curves are both purely upward sloping.

answer

FALSE

question

Average cost is the cost of producing the next unit.

answer

FALSE

1 of 38

question

Herbert Simon has concluded that decision making in industry is often best described as

answer

satisficing

question

At a profit-maximizing output level

answer

all of the above

question

The demand curve for a firm's product is also the curve showing

answer

average revenue

question

A firm that is earning zero economic profit should go out of business.

answer

FALSE

question

Marginal, average, and total figures are bound together. If any two are known, the third can be calculated.

answer

TRUE

question

The average revenue curve can also be described as the demand curve.

answer

TRUE

question

When marginal cost exceeds marginal revenue

answer

marginal profit < 0

question

Average revenue is equal to

answer

TR/Q

question

answer

MC> MR

question

Company A manufactures a single automotive component. It had total revenue of $100,000 and an economic profit of $20,000. What is the price of the component it manufactures?

answer

($100,000/quantity sold)

question

A firm that sells at a price below average cost is losing money.

answer

TRUE

question

A firm can choose a quantity of output, and the price is then determined by

answer

consumers demand

question

In the case study discussed in the chapter, the electronics firm was losing money by selling its calculators at a price that was below average cost.

answer

FALSE

question

Price and output decisions are two aspects of the same choice.

answer

TRUE

question

It can be shown that average revenue and price are always equal.

answer

TRUE

question

The term "satisficing" for decision-making behavior by many firms was coined by

answer

Herbert Simon

question

The typical total profit graphical presentation is shown as

answer

a hill, or mound

question

In the case study discussed in the chapter, the electronics firm was actually enhancing its profits by selling calculators at a price that was below average cost.

answer

TRUE

question

By definition, a firm that practices satisficing

answer

makes acceptable decisions, though not necessarily optimal ones

question

Total profit is maximized where

answer

all of the above

question

Economists and accountants use the same definition of profit.

answer

FALSE

question

Net benefit is equal to total benefit minus marginal cost.

answer

FALSE

question

If total profit is at a maximum, then average profit is zero.

answer

FALSE

question

A firm's total profit is the difference between its sales and what it pays out in costs.

answer

TRUE

question

Any change in a firm's fixed costs will change its profit-maximizing level of output.

answer

FALSE

question

If a firm's marginal profit is negative, it should reduce its output level.

answer

TRUE

question

A grocery store sells soup for $1.50 a can, or $2.50 for two cans. To a customer, the marginal cost of buying the second can of soup is

answer

question

Firms can make decisions using marginal analysis even if they do not know the shape of a demand curve.

answer

TRUE

question

Marginal analysis is useful in economics, but not in other areas of life.

answer

FALSE

question

answer

$2.50

question

Accounting profit is usually smaller than economic profit.

answer

FALSE

question

Price and quantity decisions made by a company have vital influences on

answer

all of the above are correct

question

If marginal cost is rising, then average cost must be rising.

answer

FALSE

question

Total revenue

answer

all of the above are correct

question

If the marginal profit of the next unit is negative, the firm should produce more output in order to generate greater profit.

answer

FALSE

question

A small business owner who is earning a positive economic profit, no matter how small, is doing better than if she sold her business and went to work for another firm.

answer

TRUE

question

Marginal cost curves and average cost curves are both purely upward sloping.

answer

FALSE

question

Average cost is the cost of producing the next unit.

answer

FALSE

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