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ECO 561 Week 2 Individual Assignment - Knowledge Check - A+ Guide!

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Exam Practice

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1.
Purely competitive firms increase total revenue by
A.
increasing production
B.
decreasing production
C.
increasing price
D.
decreasing price
2.
What are two ways for a competitive firm to determine the optimal level of production,
that is, the level of production that will maximize profit or minimize losses?
A.
Comparing total revenue to total cost or marginal revenue to marginal costs
B.
Comparing average revenue to average costs or marginal revenue to marginal costs
C.
Comparing average variable costs to price or marginal revenue to price
D.
Comparing total revenue to average variable costs or price to average variable costs
3.
Suppose that a firm determines that its marginal revenue is greater than its marginal
cost, it would be better to
A.

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increase production
B.
decrease production
C.
keep production the same
D.
increase price
7.
Marginal cost can be defined as the addition to _____ of one more unit of output.
A.
total variable costs
B.
average total costs
C.
average variable costs
D.
total fixed costs
4.
It is profitable for a firm to continue employing additional resources as long as
A.
Marginal Revenue Product >= Marginal Resource Cost
B.
Marginal Revenue Product <= Marginal Resource Cost
C.

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Marginal revenue >= Marginal cost
D.
Marginal Revenue Product >= Price
5.
As additional units are produced, the marginal revenue product falls for all firms
because marginal product decreases. For firms operating in industries that are not
perfectly competitive, marginal revenue product also falls because
A.
product price falls as output increases
B.
product price falls as output decreases
C.
product price increases as output increases
D.
product price increases as output decreases
6.
All things being equal, an increase in demand for a product,
A.
increases demand for the resources used in its production
B.
decreases demand for the resources used in its production
C.
increases the supply of a product
D.

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