Deck 2: Revenue of the Firm

Question 1

The demand function for a firm relates the quantities of a product or service that consumers would like to purchase during some specific period to the variables which influence consumer decisions to buy the good or service.

Answer 1

True

Question 2

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the Q_X equation is Q_X = 8550 - 100P_X.

Answer 2

True

Question 3

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the Q_X equation is Q_X = 1050 - 100P_X.

Answer 3

False

Question 4

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the total revenue equation is TR=85.5Q_X - .01Q_X².

Question 5

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, the average revenue equation is:
AR = 53.6 - .004Q_X.

Question 6

Average revenue is equal to price if all units are sold at the same price.

Question 7

Average revenue is equal to total revenue divided by quantity sold.

Question 8

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, the Q_X equation is Q_X = 13,400 - 250Px.

Question 9

Average revenue is the revenue received per unit of product sold.

Question 10

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, the Q_X equation is Q_X = 13,400 + 250Px.

Question 11

Total revenue is the total dollar sales of a firm during some particular time period and is equal to the price of a product multiplied by the quantity sold.

Question 12

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, the total revenue equation is:
TR = 53.6Q_X - .004Q_X².

Question 13

A demand curve is a curve or line showing the relation between the quantity demanded per time period of a good or service and various possible prices of that good or service.

Question 14

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the price equation is P_X = 85.50 - .01Q_X.

Question 15

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, the average revenue equation is:
AR = 13.6 - .004Q_X.

Question 16

The demand function for a firm relates how the quantities of a product or service that consumers would like to purchase during some specific period is influenced by variables such as the price of a firm's products, the prices of related goods, consumers' incomes, the season of the year, and dollars spent on advertising.

Question 17

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, the total revenue equation is:
TR = 53.6Q_X -.004Q_X.

Question 18

Marginal revenue is the rate of change of total revenue with respect to price.

Question 19

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the average revenue equation is AR = 58.85 - .01Q_X.

Question 20

Marginal revenue is the rate of change of total revenue from selling one more unit of the product.

Question 21

If an individual consumer purchases more of a good when his or her income increases, that good is said to be a normal good.

Question 22

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, marginal revenue will be zero where Q = 6700.

Question 23

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, marginal revenue will be zero where
Q = 13,400.

Question 24

Any demand function variable that will cause a demand curve to shift is usually called normal good.

Question 25

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, the marginal revenue equation is:
MR = 53.6-.008Q_X

Question 26

Technically, arc marginal revenue at a particular output level is the value of the derivative of the total revenue function with respect to quantity, dTR/dQ, at that point.

Question 27

Given the demand function of Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, the maximum total revenue that can be attained is $179,560.

Question 28

Since the average revenue curve gives the relationship between price and quantity demanded for a firm,. The average revenue curve is also the firm's demand curve.

Question 29

Arc marginal revenue measures the average rate of change of total revenue with respect to quantity sold over some range of output.

Question 30

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the maximum total revenue that can be attained is where P = 42.75 and Q = 4275.

Question 31

Technically, marginal revenue at a particular output level is the value of the derivative of the total revenue function with respect to quantity, dTR/dQ, at that point.

Question 32

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, marginal revenue will be zero where Q = 8550.

Question 33

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the maximum total revenue that can be attained is where P = 42.75 for a total of $182.756.25.

Question 34

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the marginal revenue equation is MR = 85.50 - .02Q_X.

Question 35

Determinants of demand for a given good or service are demand function variables other then its own price.

Question 36

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, the marginal revenue equation is MR = 85.50 - .01Q_X²_.

Question 37

Marginal revenue at a specific quantity is the slope of the total revenue curve at that quantity demanded.

Question 38

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, the maximum total revenue that can be attained is $118,240.

Question 39

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, marginal revenue will be zero where Q = 4275.

Question 40

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, the marginal revenue equation is:
MR = 53.6-.004Q_X²

Question 41

If an individual consumer purchases less of a good when his or her income increases, that good is said to be a normal good.

Question 42

If the increase in the dollar volume of an individual consumer's purchases of a good is greater than the dollar volume increase in his or her income, then that good is said to be a superior good.

Question 43

If the absolute value of the price elasticity of demand is 0, then the quantity demanded is unitary elastic with respect to price.

Question 44

A substitute good is a good that can be used in place of some other good.

Question 45

Determinants of supply are those variables other than a good's own price that change the quantity of the good that sellers are willing and able to sell.

Question 46

If the absolute value of the price elasticity of demand is greater than 1, then the quantity demanded is inelastic with respect to price.

Question 47

Given the following income and quantity demanded for good X, we know that this good is a superior good.

Question 48

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_X = $60.00 P_Y = $40.00. I = $2500, and A = $5,000. When price of good X is increased to $75.00, we know that demand for good X is elastic.

Question 49

Frozen yogurt and ice cream are complementary goods.

Question 50

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000. For the range from P_X = $60.00 to P_X = $75.00, the arc price elasticity of demand is - 7.05.

Question 51

Suits and ties are substitute goods.

Question 52

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000. For the range from P_X = $60.00 to P_X = $75.00, the arc price elasticity of demand is -3.75.

Question 53

The responsiveness of the quantity demanded to a change the product's own price is the price elasticity of demand.

Question 54

If the absolute value of the price elasticity of demand is less than 1, then the quantity demanded is inelastic with respect to price.

Question 55

Complementary goods are generally used with one another.

Question 56

If an individual consumer purchases less of a good when his or her income increases, that good is said to be an inferior good.

Question 57

The responsiveness of the quantity demanded to a change in the value of the income variable in the demand function is the income elasticity of demand.

Question 58

If the absolute value of the price elasticity of demand is less than 1, then the quantity demanded is elastic with respect to price.

Question 59

Given the following price and quantity demanded of good X, we know that demand for good X is inelastic over this range.

Question 60

If the absolute value of the price elasticity of demand is greater than 1, then the quantity demanded is elastic with respect to price.

Question 61

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, what is the maximum total revenue that can be attained?

A) $82,567.52
B) $182,756.25
C) $296,256.73
D) $365,512.5
E) none of the above

Question 62

Fill in the following table for Total Revenue TR):

A) 0, 2700, 4800, 6300, 7200
B) 0, 500, 3800, 5500, 6700
C) 900, 5500, 6800, 7200, 7500
D) 250, 2200, 3300, 4500, 7200
E) 0, 1000, 3000, 4600, 5800

Question 63

The price of a firm's product times the quantity demanded of that product is:

A) total revenue
B) marginal revenue
C) the firm's demand curve
D) price elasticity of demand
E) average revenue

Question 64

Based on the following price and quantity demanded information for goods X and Y, these goods are complementary goods.

Question 65

The rate of change of total revenue from selling one more unit of a product is its:

A) average revenue
B) the firm's demand curve
C) price elasticity of demand
D) total revenue
E) marginal revenue

Question 66

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where
P_Y = $50.00 and I = $60,000, what is the maximum total revenue that can be attained?

A) $79,650
B) $156,567
C) $179,560
D) $227,657
E) none of the above

Question 67

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, what is the equation of the demand curve for X?

A) Q_X = 1500 - 100P_X
B) Q_X = 1500 + 100P_X
C) Q_X = 8550 - 100P_X
D) Q_X = 8550 + 100P_X
E) Q_X= 4275 - 100P_X

Question 68

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, what is the marginal revenue equation?

A) MR = 15 - .01Q_X²
B) MR = 15 +.02Q_X
C) MR = 85.5 - .02Q_X
D) MR = 85.5 + .01Q_X²
E) MR = 85.5 - .02Q_X²

Question 69

If all units of a product are sold at the same price, then the firm's total revenue divided by the quantity demanded is equal to:

A) marginal revenue
B) the firm's demand curve
C) the product's price
D) price elasticity of demand
E) total average revenue

Question 70

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, what is the total revenue equation?

A) TR = 15Q_X - .01Q_X²
B) TR = 15Q_X +.01Q_X²
C) TR = 85.5 - .01Q_X
D) TR = 85.5 + .01Q_X²
E) TR = 85.5Q_X - .01Q_X²

Question 71

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where
P_Y = $50.00 and I = $60,000, what is the total revenue equation?

A) TR = 20Q_X - .004Q_X²
B) TR = 20Q_X +.004Q_X²
C) TR = 53.6 - .008Q_X
D) TR = 53.6Q_X - .004Q_X²
E) TR = 53.6 + .004Q_X²

Question 72

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where
P_Y = $50.00 and I = $60,000, at what quantity of good X will marginal revenue equal zero?

A) 2144
B) 3420
C) 5500
D) 6700
E) 7244

Question 73

The responsiveness of the quantity demanded to a change in the value of the price of a related product contained in the demand function is the cross price elasticity of demand.

Question 74

Fill in the following table for total revenue TR):

A) 0, 450, 700, 950, 1000
B) 0, 350, 500, 850, 1100
C) 0, 450, 800, 1050, 1200
D) 550, 700, 850, 1050, 1250
E) 0, 550, 800, 950, 1100, 1250

Question 75

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where P_Y = $50.00 and I = $60,000, what is the price equation of the demand curve for X?

A) P_X = 20 - .004Q_X
B) P_X = 20 + .004Q_X
C) P_X = 53.6 - .004Q_X
D) P_X= 53.6 + .004Q_X
E) none of the above

Question 76

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where
P_Y = $50.00 and I = $60,000, what is the equation of the demand curve for X?

A) Q_X = 5000 - 250P_X
B) Q_X = 5000 + 250P_X
C) Q_X= 8550 - 250P_X
D) Q_X = 13,400 - 250P_X
E) Q_X = 13,00 + 250P_X

Question 77

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, what is the price equation?

A) P_X = 15 - .01Q_X
B) P_X = 15 + 100Q_X
C) P_X = 85.50 - 100Q_X
D) P_X = 85.50 - .01Q_X
E) P_X= 85.5 + .01Q_X

Question 78

Which of the following statements regarding arc elasticities is FALSE?

A) the arc elasticity approximates point elasticity.
B) arc elasticities do not measure responsiveness; only point elasticities do this.
C) arc elasticities do NOT use derivatives in their calculations.
D) arc elasticities are elasticities calculated between two points or two values of a variable.
E) the arc elasticity refers to the average responsiveness of Q_x.

Question 79

Given the demand function Q_X = 5,000 - 250P_X +120P_Y +.04I where
P_Y = $50.00 and I = $60,000, what is the marginal revenue equation?

A) MR = 20 - .004Q_X²
B) MR = 20 +.008Q_X
C) MR = 53.6 - .004Q_X²
D) MR = 53.6 - .008Q_X
E) MR = 53.6 + .008Q_X²

Question 80

Given the demand function Q_X = 1500 - 100P_X + 75P_Y + 1.5I + .06A where P_Y = $40.00. I = $2500, and A = $5,000, at what quantity of good X will marginal revenue equal zero?

A) 2575
B) 4275
C) 6725
D) 8550
E) 10,171