Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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What word describes the money that a business pays for its inputs?
a. | Cost. | b. | Output. | c. | Revenue. | d. | Production. |
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2.
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The main objective of a business in a market economy is
a. | profit maximization. | b. | controlling costs. | c. | decreasing
revenue. | d. | managing the production function. |
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3.
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Economists think of a business as a machine, where you put inputs in one end and
get outputs from the other end. This metaphor is called the
a. | revenue process. | b. | cost process. | c. | profit
process. | d. | production function. |
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4.
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Marginal cost generally ________ quantity produced.
a. | rises with | b. | decreases with | c. | stays the same with
varying | d. | is not related to |
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5.
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Variable costs are also known as
a. | long-term costs. | b. | short-term costs. | c. | production
costs. | d. | variable average product. |
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6.
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The additional money a business gets from producing and selling one more unit of
output is
a. | marginal product. | b. | long-term revenue. | c. | marginal
revenue. | d. | average profit. |
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7.
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A profit-maximizing business will increase production as long as
a. | marginal cost exceeds marginal revenue. | b. | marginal price
exceeds average product. | c. | average product exceeds marginal
price. | d. | marginal revenue exceeds marginal cost. |
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8.
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_____________ is the added revenue from producing and selling one more unit of
output.
a. | Added revenue | b. | Marginal profit | c. | Marginal
cost | d. | Marginal revenue |
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9.
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If June can earn $1,500 in revenue from painting two houses, how much can she
earn in revenue from painting three houses? (Assume she is just one housepainter in a large market of
housepainters, and that she can easily find a third customer.)
a. | Exactly $2,250. | b. | Less than $2,250. | c. | More than
$2,250. | d. | Exactly $4,500. |
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10.
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As the market price of a good rises, businesses will respond by producing more
of that good because
a. | the rising price causes marginal cost to fall. | b. | marginal cost
exceeds marginal revenue after the price increase. | c. | laws and regulations require them to do
so. | d. | marginal revenue exceeds marginal cost after the price
increase. |
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