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Chapter Quiz
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1
__________ is the process of turning inputs into __________.
A)Profit maximization; revenues
B)Profit maximization; outputs
C)Production; revenues
D)Production; outputs
2
Which of the following formulas is correct?
A)Profit = Revenue – Cost.
B)Profit = Revenue + Cost.
C)Profit = Cost – Revenue.
D)Revenue = Profit – Cost.
3
Suppose a local gym has a specific procedure that must be followed in the event that one of its customers is injured while working out. This procedure is what type of input?
A)Labor.
B)An intermediate input.
C)Capital.
D)Business know-how.
4
Economists call the relationship between amounts of inputs and quantities of outputs
A)the production function.
B)the profit function.
C)the marginal product of labor.
D)business know-how.
5
The cost function reports the total cost as it relates to what other variable?
A)Revenue.
B)The number of inputs.
C)Marginal product of labor.
D)The number of units of output.
6
Marginal cost equals the added cost of producing additional units of output __________ the number of additional units of output.
A)plus
B)multiplied by
C)divided by
D)minus
7
The marginal revenue from producing one more unit of output will be equal to the market price if the business
A)can sell everything that it produces, and the business is small relative to the total market.
B)can sell everything that it produces, and the business is the only seller in the market.
C)produces some output that it cannot sell, regardless of the total size of the market.
D)is a nonprofit charity.
8
Revenue is equal to the amount of output sold __________ the per-unit price.
A)plus
B)multiplied by
C)divided by
D)minus
9
Which of the following is equivalent to the profit-maximizing rule as given in the textbook?
A)"If you can sell one more unit for more than it costs you to make it, you should produce it and sell it."
B)"If how much you're currently earning from selling your output is greater than how much you're currently spending on production, you should produce and sell more."
C)"If you're not earning as much profit as you could be, then you need to reduce the amount of output you produce and sell."
D)"If the market price is lower than what you have to spend producing one more unit of output, you should produce it."
10
At the profit-maximizing level of output, marginal cost __________ marginal revenue.
A)exceeds
B)equals
C)is less than
D)diminishes, just like





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