Download practice chapter 9

PRACTICE QUESTIONS ON CH. 9 ECO61 FALL 2008 UDAYAN ROY
Suppose you own a store that sells computers. You have determined that the demand function for your
computers is D(P) = 900 - 3P. At what price would you sell the computers if you wanted to sell 60 of
them?
A. $250
B. $275
C. $280
D. $300
Refer to Figure 9.1. What is the maximum profit that can be
achieved?
A. $250
B. $500
C. $750
D. $850
A price-taking firm's variable cost function is C = Q3, where Q is
the output per week. It has a sunk fixed cost of $2,000 per week.
Its marginal cost is MC = 3Q2. What is the profit maximizing
output if the price is P = $192?
A. 0
B. 6
C. 8
D. 10
A price-taking firm's variable cost function is C = Q3, where Q is the output per week. It has an avoidable
fixed cost of $2,000 per week. Its marginal cost is MC = 3Q2. What is the profit maximizing output if the
price is P = $192?
A. 0
B. 6
C. 8
D. 10
When a firm's demand curve is downward sloping, its marginal revenue at any positive sales quantity is
______ its price.
A. Greater than
B. Less than
C. Equal to
D. Less than or equal to
When a firm's profit maximizing sales level is positive, its marginal revenue is ______ its marginal cost at
that quantity.
A. Greater than
B. Less than
C. Equal to
D. Less than or equal to
A firm is a ______ when it can sell as much as it wants at some given price P, but nothing at any higher
price.
A. Monopoly
B. Oligopoly
C. Price taker
D. Price setter
A firm that is a price taker faces a perfectly ______ demand curve.
A. Horizontal
B. Vertical
C. Inelastic
D. Convex
A price-taking firm's marginal revenue is ______ the price of its output.
A. Equal to
B. Greater than
C. Less than
D. Less than or equal to
Jessica owns a company that makes pre-packaged sandwiches for convenience stores. The market price
for a sandwich is $5 and Jessica is a price-taker. Her daily cost for making sandwiches is C(Q) = 2.5Q +
(Q2/40) and her marginal cost is
MC = 2.5 + (Q/20). How many sandwiches should Jessica produce each day?
A. 20
B. 40
C. 45
D. 50
Jessica owns a company that makes pre-packaged sandwiches for convenience stores. The market price
for a sandwich is $5 and Jessica is a price-taker. Her daily cost for making sandwiches is C(Q) = 2.5Q +
(Q2/40) and her marginal cost is
MC = 2.5 + (Q/20). What is the average cost of a sandwich at the quantity of sandwiches Jessica should
be selling each day?
A. $2.50
B. $2.90
C. $3.30
D. $3.50
2