Question 1

Economists assume that the goal of the firm is to maximize total

Accepted Answer

Maximizing profits is the primary goal of the firm as it ensures long-term sustainability and growth. While revenue is important, it does not necessarily translate into profits as they are influenced by costs. Costs are important to minimize, but not at the expense of profits. Satisfaction is a subjective measure and cannot be quantified or maximized in the same way as profits.

Question 2

Economists normally assume that the goal of a firm is to

Accepted Answer

Economists assume that the goal of a firm is to maximize profits, which is represented by option (iii). Option (i) is not always true as firms may have other objectives besides profit maximization, such as increasing market share or pursuing social and environmental goals. Option (ii) is not universally applicable as some firms may not have competitors in their market.

Question 3

If the average total cost curve is falling,what is necessarily true of the marginal cost curve? If the average total cost curve is rising,what is necessarily true of the marginal cost curve?

Accepted Answer

The answer of If the average total cost curve is...

Question 4

Bob Edwards owns a bagel shop.Bob hires an economist who assesses the shape of the bagel shop's average total cost (ATC)curve as a function of the number of bagels produced.The results indicate a U-shaped average total cost curve.Bob's economist explains that ATC is U-shaped for two reasons.The first is the existence of diminishing marginal product,which causes it to rise.What would be the second reason? Assume that the marginal cost curve is linear.(Hint: The second reason relates to average fixed cost)

Accepted Answer

The answer of Bob Edwards owns a bagel shop.Bob hires...

Question 5

To an economist,the field of industrial organization answers which of the following questions?

Accepted Answer

Industrial organization is concerned with studying the behavior of firms in different market structures and how these affect prices, output, and allocative efficiency. Understanding how the number of firms affects market outcomes is a key question in this field.

Question 6

According to the mathematical laws that govern the relationship between average total cost and marginal cost,where must these two curves intersect?

Accepted Answer

The answer of According to the mathematical laws that govern...

Question 7

Analyzing the behavior of the firm enhances our understanding of

Accepted Answer

Analyzing the behavior of the firm helps us understand the decisions that firms make in terms of producing and supplying goods and services to the market, which ultimately determine the shape of the market supply curve.

Question 8

Total revenue equals

Accepted Answer

Total revenue is calculated by multiplying the price of a good or service by the quantity sold. Therefore, the correct choice is A, price x quantity.

Question 9

Economists normally assume that the goal of a firm is to earn

Accepted Answer

This choice includes both (i) maximizing profits and (ii) maximizing shareholder value, which are both commonly assumed goals of firms in economic theory. (iii) Maximizing social welfare is not always assumed to be a goal of firms in economics, as it can conflict with profit maximization in certain situations.

Question 10

When a firm is making a profit-maximizing production decision,which of the following principles of economics is likely to be most important to the firm's decision?

Accepted Answer

The principle of opportunity cost (the cost of something is what you give up to get it) is critical to a firm's profit-maximizing decision. The firm must weigh the costs and benefits of each production decision and choose the option that maximizes profit, which involves choosing the option with the lowest opportunity cost.

Question 11

An entrepreneur's motivation to start a business arises from

Accepted Answer

Some entrepreneurs may be motivated by an innate love for the type of business they start, others may be motivated by a desire to earn a profit, and some may be motivated by an altruistic desire to provide the world with a good product. Therefore, all of the choices could be correct, and there may be various reasons for why an entrepreneur starts a business.

Question 12

Which field of economics studies how the number of firms affects the prices in a market and the efficiency of market outcomes?

Accepted Answer

Industrial organization is the field of economics that studies how the number of firms affects the prices in a market and the efficiency of market outcomes. This includes issues such as market structure, competition, and strategic behavior of firms. The other options listed (macro economics, labor economics, and monetary economics) do not focus specifically on these issues.

Question 13

A student might describe information about the costs of production as

Accepted Answer

The answer of A student might describe information about the...

Question 14

Economists normally assume that the goal of a firm is to

Accepted Answer

Maximizing profit is a common goal for a firm as it involves maximizing revenue and minimizing costs. While maximizing revenue (option A) is important, it cannot be the only goal as it may lead to losses due to high costs. Minimizing explicit costs (option C) and total cost (option D) are important but do not reflect the overall goal of maximizing profit.

Question 15

The amount of money that a firm pays to buy inputs is called

Accepted Answer

The answer of The amount of money that a firm...

Question 16

Total cost is the

Accepted Answer

Total cost refers to the market value of all inputs a firm uses in production. This includes both fixed costs (costs that do not change with the level of output, such as rent) and variable costs (costs that change with the level of output, such as materials).

Question 17

Economists assume that the typical person who starts her own business does so with the intention of

Accepted Answer

Maximizing profits is a common objective for entrepreneurs starting a business, as it allows them to sustain and grow their venture while achieving personal financial success. While some entrepreneurs may also have charitable or altruistic motives, maximizing profits is typically the primary goal. Minimizing costs can be a means to achieve profit maximization, but is not necessarily the ultimate objective. Capturing the highest number of sales may also contribute to profit maximization, but is not the same as it and may not align with the entrepreneur's specific business strategy.

Question 18

Economists in the field of industrial organization study how

Accepted Answer

Economists in the field of industrial organization study how firms' decisions about prices and quantities depend on market conditions.

Question 19

The amount of money that a firm receives from the sale of its output is called

Accepted Answer

Total revenue is the amount of money a firm receives from the sale of its output, before subtracting any expenses or costs. Gross profit (A) is the difference between total revenue and the cost of goods sold. Net profit (B) is the difference between total revenue and all expenses, including cost of goods sold, operating expenses, and taxes. Net revenue (D) is not a commonly used term and is not the correct answer.

Question 20

Industrial organization is the study of how

Accepted Answer

Industrial organization is concerned with understanding the behavior of firms and markets in different industries. It involves analyzing how market structures, such as monopoly or oligopoly, affect firms' decisions regarding prices and quantities. Therefore, out of the given options, the best choice is D as it highlights how firms' decisions regarding prices and quantities depend on the market conditions they face.

Quiz 13: The Costs of Production

Economists assume that the goal of the firm is to maximize total

Economists normally assume that the goal of a firm is to

If the average total cost curve is falling,what is necessarily true of the marginal cost curve? If the average total cost curve is rising,what is necessarily true of the marginal cost curve?

To an economist,the field of industrial organization answers which of the following questions?

According to the mathematical laws that govern the relationship between average total cost and marginal cost,where must these two curves intersect?

Analyzing the behavior of the firm enhances our understanding of

Total revenue equals

Economists normally assume that the goal of a firm is to earn

When a firm is making a profit-maximizing production decision,which of the following principles of economics is likely to be most important to the firm's decision?

An entrepreneur's motivation to start a business arises from

Which field of economics studies how the number of firms affects the prices in a market and the efficiency of market outcomes?

A student might describe information about the costs of production as

Economists normally assume that the goal of a firm is to

The amount of money that a firm pays to buy inputs is called

Total cost is the

Economists assume that the typical person who starts her own business does so with the intention of

Economists in the field of industrial organization study how

The amount of money that a firm receives from the sale of its output is called

Industrial organization is the study of how