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Chapter 11

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Chapter 11
Use the following to answer questions 1-2:
Table: Barrels of Oil
Barrel of Oil
Produced
1
2
3
4
5
6
7
8
9
10

Total Revenue
$50
100
150
200
250
300
350
400
450
500

Total Cost
$4
10
21
38
61
90
126
176
266
390

Price
$50
50
50
50
50
50
50
50
50
50

1. (Table: Barrels of Oil) Refer to the table. How many barrels of oil should the company produce to maximize profit?
A) 6
B) 7
C) 8
D) 9
2. (Table: Barrels of Oil) Refer to the table. What is the marginal revenue of producing the fifth barrel of oil?
A) 61
B) 50
C) 200
D) 250
3. Stating that TR = TC is equivalent to stating that:
A) MR = MC.
B) P = AC.
C) P = Average fixed cost.
D) MR = P.

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4. At a ski resort located over one hour from the nearest large town, there is only …show more content…

B) The baker should not enter the industry.
C) At the profit maximizing quantity, the baker's producer surplus is –$200.
D) The baker will enjoy profits of $3,000 per day.
16. In an increasing cost industry:
A) costs rise as industry output increases.
B) costs rise as industry output decreases.
C) the long-run supply curve is flat.
D) all firms will earn normal profits in the long run.

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17. Profit is positive whenever price is greater than:
A) total cost.
B) average cost.
C) fixed cost.
D) marginal cost.
18. An industry is said to be perfectly competitive when:
A) demand in the industry is high.
B) each firm has virtually no influence over the price of its product.
C) there are many buyers and sellers, and each is large relative to the total market.
D) supply in the industry is highly elastic.
19. The decision to enter or exit an industry is based:
A) only on the level of profits/losses today.
B) only on the level of profits/losses in the future.
C) on lifetime expected profits.
D) on the marginal cost of production.
20. Which of the following statements is TRUE? Economists normally assume that the goal of the firm is to:
I. sell as much of their product as possible.
II. set the price of their product as high as possible
III. maximize profit.
A) I and II only
B) II and III only
C) I and III only
D) III only
21. Firms should exit the market if:
A) sunk costs are a significant portion of the total cost.
B) producer surplus is just

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