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1 | |
To maximize profit, a firm that produces its output in two plants will produce the level of total output at which the last unit of output produced adds the same amount to total revenue as to the... |
| | A) | firm's total cost. |
| | B) | first plant's total cost. |
| | C) | second plant's total cost. |
| | D) | both b and c |
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2 | |
To maximize its profit, a firm with two plants should... |
| | A) | choose the profit-maximizing output then allocate it equally between the two plants. |
| | B) | produce the output at which total marginal cost equals marginal revenue |
| | C) | allocate output so that marginal cost is the same in two plants |
| | D) | both a and b |
| | E) | both b and c |
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3 | |
The next 5 questions refer to the following:A firm with two plants, A and B, has the following estimated demand and marginal cost functions:Qd = 100 − 2P
MCA = 6 + 0.2QA
MCB = 8 + 0.1QB What is the firm's marginal revenue function? |
| | A) | MR = 100 - 4P |
| | B) | MR = 100 - 4Q |
| | C) | MR = 50 - P |
| | D) | MR = 50 - Q |
| | E) | none of the above |
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4 | |
What is the firm's total marginal cost function? |
| | A) | MC = 14 + 0.3Q |
| | B) | MC = 7.33 + 0.067Q |
| | C) | MC = 10 + 0.2Q |
| | D) | MC = 7 + 0.3Q |
| | E) | none of the above |
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5 | |
In order to maximize profit, how many units of output should the firm produce? |
| | A) | 20 |
| | B) | 30 |
| | C) | 40 |
| | D) | 50 |
| | E) | 60 |
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6 | |
What is the profit-maximizing price? |
| | A) | $20 |
| | B) | $22.50 |
| | C) | $30 |
| | D) | $40 |
| | E) | none of the above |
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7 | |
How should the firm allocate total output between the two plants in order to maximize profit? |
| | A) | produce 15 units in plant A, 5 units in plant B |
| | B) | produce 20 units in plant A, 10 units in plant B |
| | C) | produce 20 units in plant A, 20 units in plant B |
| | D) | produce 20 units in plant A, 30 units in plant B |
| | E) | none of the above |
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8 | |
The next 2 questions refer to the following:A manufacturer has two plant -- one in Texas and one in Taiwan. At the current allocation of total output between the two plants, the last unit of output produced in the Texas plant added $10 total cost, while the last unit of output produced in the Taiwan plant added $8 to total cost. In order to maximize profit, the firm should... |
| | A) | keep the allocation between plants unchanged. |
| | B) | produce all its output in the Taiwan plant. |
| | C) | produce all its output in the Texas plant. |
| | D) | switch some output from the Texas to the Taiwan plant. |
| | E) | switch some output from the Taiwan to the Texas plant. |
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9 | |
If the firm switches one unit of output from the Taiwan plant to the Texas plant, then... |
| | A) | profit will increase $8. |
| | B) | profit will increase $18. |
| | C) | profit will decrease $10. |
| | D) | profit will decrease $2. |
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10 | |
A firm selling in two markets is practicing price discrimination... |
| | A) | anytime it charges different consumers different prices. |
| | B) | when it refuses to sell the good to some group of consumers. |
| | C) | when it is charging different consumers different prices and the price difference is not based upon cost differences. |
| | D) | all of the above |
| | E) | none of the above |
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11 | |
To maximize profit a price discriminating firm should... |
| | A) | allocate the output so that marginal revenue is the same in each market. |
| | B) | allocate the optimal output so the elasticity is the same in each market. |
| | C) | produce the output at which total marginal revenue equals marginal cost. |
| | D) | both a and c |
| | E) | both b and c |
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12 | |
In order to maximize profit, a firm that sells its output in two markets will allocate total output between the two markets so that: |
| | A) | marginal revenue for the firm is equal to the sum of the marginal costs |
| | B) | marginal revenue for the firm is equal to the sum of the marginal revenues. |
| | C) | marginal revenue is equal in the two markets. |
| | D) | both a and b |
| | E) | none of the above |
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13 | |
The next 2 questions refer to the following:A newspaper offers students a discount on the regular subscription rate. The total number of subscriptions is optimal, and, at the current prices, the marginal revenue from the last subscription sold to a student is $8, while the marginal revenue from the last subscription sold to a regular customer is $12. In order to maximize profit, the magazine should... |
| | A) | offer all customers the same discount received by the students. |
| | B) | offer students a lower discount (raise the price to students). |
| | C) | offer students a higher discount (lower the price to students). |
| | D) | stop offering students a discount on the regular subscription rate. |
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14 | |
If the magazine sells one more subscription to a regular customer and one less subscription to a student: |
| | A) | profit will increase $4 |
| | B) | profit will increase $12 |
| | C) | profit will decrease $8 |
| | D) | profit will decrease $12 |
| | E) | none of the above |
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15 | |
The next 2 questions relate to the following:A firm is producing two goods (X and Y) that are related in consumption. The demand function for X is:Qd = 80 − 2Px − 12Py Which of the following pairs of goods might the firm be producing? |
| | A) | cola and diet cola |
| | B) | golf shoes and golf gloves |
| | C) | magazines and tennis rackets |
| | D) | bran cereal and sugar-frosted corn flakes |
| | E) | both a and d |
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16 | |
In order to maximize profit, the firm... |
| | A) | should choose the levels of output for goods X and Y at which total marginal revenue equals total marginal cost. |
| | B) | should treat the price of Y as given when determining the optimal production of good X. |
| | C) | should determine jointly the levels of output for the two goods. |
| | D) | both a and b |
| | E) | both b and c |
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17 | |
The next 3 questions refer to the following figure: <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=gif::::/sites/dl/free/0070601607/124375/chap14_17.gif','popWin', 'width=646,height=621,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (6.0K)</a>]]>
How many toaster ovens should the firm produce? |
| | A) | 100 |
| | B) | 80 |
| | C) | 60 |
| | D) | 50 |
| | E) | 40 |
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18 | |
What price should the firm set? |
| | A) | $55 |
| | B) | $45 |
| | C) | $40 |
| | D) | $35 |
| | E) | $25 |
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19 | |
How should the firm allocate total output between the two plants in order to maximize profit? |
| | A) | 40 to plant 1, 40 to plant 2 |
| | B) | 20 to plant 1, 30 to plant 2 |
| | C) | 10 to plant 1, 40 to plant 2 |
| | D) | 20 to plant 1, 50 to plant 2 |
| | E) | 20 to plant 1, 60 to plant 2 |
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20 | |
To maximize profit, a firm that produces two goods that are related in consumption should chose the levels of output at which: |
| | A) | marginal revenue equals marginal cost for each good. |
| | B) | total marginal revenue equals the marginal cost of each good. |
| | C) | the marginal revenue of each good equals total marginal cost. |
| | D) | total marginal revenue equals total marginal cost. |
| | E) | total marginal revenue exceeds marginal cost by the greatest amount. |
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