INTRODUCTION TO MICROECONOMICS
FINAL EXAM SAMPLE QUESTIONS
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet,
but buys one on sale for $125. Paul's consumer surplus from the purchase is
A) $325
B) $200
C) $125
D) $75
1)
Table 4-1
Consumer
Tom
Dick
Harriet
Willingness to Pay
$40
30
25
2) Refer to Table 4-1. The table above lists the highest prices three consumers, Tom, Dick and Harriet,
are willing to pay for a short-sleeved polo shirt. If the price of one of the shirts is $28 dollars
A) Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts.
B) Tom will receive $12 of consumer surplus from buying one shirt.
C) Harriet will receive $25 of consumer surplus since she will buy no shirts.
D) Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet
will buy no shirts.
2)
Table 4-2
The Waco
Kid's Cowboy
Hats
1st hat
2nd hat
3rd hat
4th hat
Marginal Cost
(dollars)
$24
30
38
46
3) Refer to Table 4-2. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm
that specializes in producing western wear. If the market price of The Waco Kid's cowboy hats is
$40
A) producer surplus from the first hat is $40.
B) there will be a surplus; as a result, the price will fall to $24.
C) The Waco Kid will produce four hats.
D) producer surplus will equal $28.
1
3)
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
4) The graph below represents the market for lychee nuts. The equilibrium price is $7.00 per bushel, but the
market price is $5.00 per bushel. Identify the areas representing consumer surplus, producer surplus, and
deadweight loss at the equilibrium price of $7.00 and at the market price of $5.00.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Figure 4-4
5) Refer to Figure 4-4. The figure above represents the market for pecans. Assume that this is a
competitive market. If 8,000 pounds of pecans are sold
A) producer surplus equals consumer surplus.
B) the deadweight loss is equal to economic surplus.
C) marginal benefit is equal to marginal cost.
D) the marginal benefit of each of the 8,000 pounds of pecans equals $9.
5)
6) Economic efficiency is defined as a market outcome in which the marginal benefit to consumers of
the last unit produced is equal to the marginal cost of production, and in which
A) the sum of the benefits to firms is equal to the sum of the benefits to consumers.
B) the sum of consumer surplus and producer surplus is minimized.
C) economic surplus is minimized.
D) the sum of consumer surplus and producer surplus is at a maximum.
6)
7) In a competitive market the demand curve shows the ________ received by consumers and the
supply curve shows the ________.
A) marginal benefit; marginal cost
B) utility; average cost.
C) economic surplus; opportunity cost
D) net benefit; net cost
7)
2
Table 4-3
Hourly Wage
(dollars)
$7.50
8.50
9.50
10.50
11.50
12.50
Quantity of
Labor
Supplied
530,000
550,000
570,000
590,000
610,000
630,000
Quantity of
Labor
Demanded
650,000
630,000
610,000
590,000
570,000
550,000
Table 4-3 shows the demand and supply schedules for labor market in the city of Pixley.
8) Refer to Table 4-3. What is the equilibrium hourly wage (W*) and the equilibrium quantity of labor
(Q*)?
A) W* = $11.50; Q* = 570,000
B) W* = $9.50; Q* = 570,000
C) W* = $10.50; Q* = 1,200,000
D) W* = $10.50; Q* = 590,000
8)
9) To affect the market outcome, a price ceiling
A) must be set below the price floor.
C) must be set below the legal price.
9)
B) must be set below the equilibrium price.
D) must be set below the black market price.
Figure 4-5
Figure 4-5 shows the market for apartments in Springfield. Recently, the government imposed a rent ceiling of $1,000 per
month.
10) Refer to Figure 4-5. What is the value of consumer surplus after the imposition of the ceiling?
A) $120,000
B) $230,000
C) $270,000
D) $430,000
10)
11) Refer to Figure 4-5. What is the value of the deadweight loss after the imposition of the ceiling?
A) $50,000
B) $125,000
C) $175,000
D) $260,000
11)
3
Figure 4-6
Figure 4-6 shows the demand and supply curves for the almond market. The government believes that the equilibrium price
is too low and tries to help almond growers by setting a price floor at Pf.
12) Refer to Figure 4-6. What area represents consumer surplus after the imposition of the price floor?
A) A + B
B) A + B + E + F
C) A + B + E
D) A
12)
Figure 4-8
Figure 4-8 shows the market for beer. The government plans to impose a unit tax in this market.
13) Refer to Figure 4-8. How much of the tax is paid by buyers?
A) $2
B) $5
C) $7
D) $12
14) Suppose that in Canada the government places a $1,500 tax on the buyers of new snowmobiles.
After the purchase of a new snowmobile, a buyer must pay the government $1,500. How would
the imposition of the tax on buyers be illustrated in a graph?
A) The tax will shift the supply curve to the left by $1,500.
B) The tax will shift both the demand and supply curve to the right by $1,500.
C) The tax will shift the demand curve to the left by $1,500.
D) The tax will shift the demand curve to the right by $1,500.
4
13)
14)
15) When the government taxes a good or service, it
A) eliminates the deadweight loss associated with the good or service.
B) increases producer surplus for the good or service.
C) affects the market equilibrium for that good or service.
D) increases consumer surplus for the good or service.
15)
16) Which of the following is an example of positive technological change?
A) A firm conducts a new advertising campaign. As a result, the demand for the firm's surf
boards increases.
B) A firm offers workers a higher wage to work on weekends and at night. As a result, the firm
is able to increase its weekly production of surf boards.
C) A firm's workers participate in a training program designed to increase the number of surf
boards they can produce per day.
D) A firm buys an additional machine that it uses to make surf boards. As a result, the firm is
able to increase its weekly production of surf boards.
16)
17) A firm has successfully adopted a positive technological change when
A) can pay its workers less yet increase its output.
B) it can produce more output using the same inputs.
C) it sees an increase in worker productivity.
D) it produces less pollution in its production process.
17)
18) A firm's cost of production is determined by all of the following except
A) the productivity of its workers.
B) the technology used to produce its output.
C) the cost of raw material used in production.
D) the amount of corporate taxes it must pay on its profit.
18)
19) Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is
$2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day.
Calculate Vipsana's average fixed cost per day when she produces 50 gyros using two workers?
A) $2.00
B) $2.40
C) $4.40
D) $6.80
19)
20) Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is
$2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day.
Calculate Vipsana's total cost per day when she produces 50 gyros using two workers?
A) $100
B) $124.40
C) $220
D) $340
20)
21) Vipsana's Gyros House sells gyros. The cost of ingredients (pita, meat, spices, etc.) to make a gyro is
$2.00. Vipsana pays her employees $60 per day. She also incurs a fixed cost of $120 per day.
Calculate Vipsana's variable cost per day when she produces 50 gyros using two workers?
A) $100
B) $124.40
C) $220
D) $240
21)
22) The production function shows
A) the total cost of producing a given quantity of output.
B) the technology used to produce output.
C) the maximum output that can be produced from each possible quantity of inputs.
D) the incremental output gained by improving the production process.
22)
5
23) Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon,
Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was
earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent
interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant
for $12,000 and incurred another $15,000 on equipment and hairdressing material. Based on this
information, what is the amount of her explicit costs?
A) $45,000
B) $45,500
C) $47,000
D) $87,000
23)
24) Which of the following are implicit costs for a typical firm?
A) a business licensing fee
B) utilities cost
C) the cost of labor hired by the firm
D) opportunity costs of capital owned and used by the firm
24)
25) Red Stone Creamery currently hires 5 workers. When it added a 6th worker, its output actually fell.
Which of the following statements is true?
A) The average product of the sixth worker is negative.
B) The sixth worker is not as skilled as the fifth worker.
C) The total product becomes negative.
D) The marginal product of the sixth worker must be negative.
25)
26) As a firm hires more labor in the short run, the
A) costs of production are increasing at a fixed rate per unit of output.
B) level of total product stays constant.
C) extra output of another worker may rise at first, but eventually must fall.
D) output per worker rises.
26)
27) If diminishing marginal returns have already set in for Golden Lark Woodworks, and the marginal
product of the 6th carpenter is 8 chairs, then the marginal product of the 7th carpenter is
A) negative.
B) zero.
C) less than 8 chairs.
D) more than 8 chairs.
27)
6
Figure 11-1
28) Refer to Figure 11-1. The marginal product of the 3rd worker is
A) 57.
B) 19.
C) 15.
D) 11.
28)
29) If another worker adds 9 units of output to a group of workers who had an average product of 7
units, then the average product of labor
A) will increase.
B) will decrease.
C) will remain the same.
D) and what will happen to it cannot be determined.
29)
30) When a firm produces 50,000 units of output, its total cost equals $6.5 million. When it increases its
production to 70,000 units of output, its total cost increases to $9.4 million. Within this range, the
marginal cost of an additional unit of output is
A) $41.43.
B) $134.29.
C) $135.
D) $145.
30)
Table 11-3
Quantity of
Lanterns
75
80
90
100
115
117
120
Fixed Cost
(dollars)
200
200
200
200
200
200
200
Variable Cost
(dollars)
170
230
Total Cost
(dollars)
370
430
Average Total Cost
(dollars)
4.93
5.36
7.67
810
1264
1480
11.8
12.5
1464
Table 11-3 shows cost data for Lotus Lanterns, a producer of whimsical night lights.
31) Refer to Table 11-3. What is the average total cost of production when the firm produces 120
lanterns?
A) $1,680
B) $72
C) $14
D) $12.3
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31)
Figure 11-4
32) Refer to Figure 11-4. The vertical difference between curves F and G measures
A) marginal costs.
B) average fixed costs.
C) sunk costs.
D) fixed costs.
32)
33) If production displays economies of scale, the long-run average cost curve is
A) downward-sloping.
B) upward sloping.
C) below the long-run marginal cost curve.
D) above the short-run average total cost curve.
33)
34) If, when a firm doubles all its inputs, its average cost of production increases, then production
displays
A) diseconomies of scale.
B) diminishing returns.
C) declining fixed costs.
D) economies of scale.
34)
8
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
Table 11-2
Quantity of
workers
0
1
2
3
4
5
Quantity of foot
massages per day
0
10
25
45
60
70
Fixed cost Variable
cost
Total cost Average total Marginal
cost
cost
35) Refer to Table 11-2. Alicia Gregory owns a foot massage business. She leases 4
computer-controlled massage booths, for which she pays $125 per day. She cannot
increase the number machines she leases without giving the manufacturer 3 months notice.
She can hire as many workers as she wants at a cost of $75 per day per worker. These are
the only two inputs she uses in her business. Use this information to fill in the columns in
the above table.
35)
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
36) Refer to Figure 11-4. Curve G approaches curve F because
A) fixed cost falls as capacity rises.
B) total cost falls as more and more is produced.
C) average fixed cost falls as output rises.
D) marginal cost is above average variable costs.
36)
37) Refer to Table 11-3. What is the average variable cost per unit of production when the firm
produces 90 lanterns?
A) $490
B) $33.67
C) $7.67
D) $5.44
37)
38) Refer to Table 11-3. What is the marginal cost per unit of production when the firm produces 100
lanterns?
A) $420
B) $32
C) $11.1
D) $8.1
38)
39) Refer to Figure 11-1. The marginal product of the 7th worker is
A) 66.
B) 9.43.
C) 2.
39)
D) -2.
40) Refer to Figure 11-1. The average product of the 4th worker
A) is 68.
B) is 17.
C) is 11.
D) cannot be determined.
40)
41) Refer to Figure 11-1. Diminishing marginal productivity sets in after
A) the 2nd worker is hired.
B) the 3rd worker is hired.
C) the 4th worker is hired.
D) the 5th worker is hired.
41)
9
42) Refer to Figure 11-1. In a diagram that shows the marginal product of labor on the vertical axis and
labor on the horizontal axis, the marginal product curve
A) never intersects the horizontal axis.
B) intersects the horizontal axis at a point corresponding to the 5th worker.
C) intersects the horizontal axis at a point corresponding to the 6th worker.
D) intersects the horizontal axis at a point corresponding to the 8th worker.
42)
43) Refer to Figure 4-8. For each unit sold, the price sellers receive after the tax (net of tax) is
A) $20.
B) $22.
C) $27.
D) $32.
43)
44) Refer to Figure 4-8. How much of the tax is paid by producers?
A) $2
B) $5
C) $7
44)
D) $12
45) Refer to Figure 4-8. As a result of the tax, is there a loss in consumer surplus?
A) No, because the market reaches a new equilibrium
B) No, because the producer pays the tax.
C) No, because consumers are charged a lower price to cover their tax burden.
D) Yes, because consumers paying a price above the economically efficient price.
45)
46) Refer to Figure 4-6. What is the area that represents producer surplus after the imposition of the
price floor?
A) B + E + F
B) B + C + D + E
C) A + B + E
D) B + E
46)
47) Refer to Figure 4-6. What area represents the portion of consumer surplus that has been transferred
to producer surplus as a result of the price floor?
A) B + C
B) E
C) B + E
D) B
47)
48) Refer to Figure 4-6. What area represents the deadweight loss after the imposition of the price
floor?
A) C + D + F + G
B) C + D + G
C) F + G
D) C + D
48)
49) Refer to Table 4-3. If a minimum wage of $9.50 an hour is mandated, what is the quantity of labor
demanded?
A) 40,000
B) 570,000
C) 610,000
D) 1,180,000
49)
50) Refer to Table 4-3. If a minimum wage of $9.50 an hour is mandated, what is the quantity of labor
supplied?
A) 40,000
B) 570,000
C) 610,000
D) 1,180,000
50)
51) Refer to Table 4-3. If a minimum wage of $9.50 is mandated there will be a
A) shortage of 20,000 units of labor.
B) shortage of 40,000 units of labor.
C) surplus of 20,000 units of labor.
D) surplus of 40,000 units of labor.
51)
52) Refer to Table 4-3. Suppose that the quantity of labor demanded decreases by 80,000 at each wage
level. What are the new free market equilibrium hourly wage and the new equilibrium quantity of
labor?
A) W = $12.50; Q = 630,000
B) W = $9.50; Q = 570,000
C) W = $8.50; Q = 550,000
D) W = $9.50; Q = 590,000
52)
10
53) Which of the following is not a characteristic of a monopolistically competitive market structure?
A) All sellers sell products that are differentiated.
B) Each firm must react to actions of other firms.
C) There are low barriers to entry of new firms.
D) There is a large number of independently acting small sellers.
53)
54) Perfect competition is characterized by all of the following except
A) homogeneous products.
B) a horizontal demand curve for individual sellers.
C) heavy advertising by individual sellers.
D) sellers are price takers.
54)
55) The price of a seller's product in perfect competition is determined by
A) the individual demander.
B) market demand and market supply.
C) a few of the sellers.
D) the individual seller.
55)
56) The demand curve for each seller's product in perfect competition is horizontal at the market price
because
A) all the demanders get together and set the price.
B) the price is set by the government.
C) all the sellers get together and set the price.
D) each seller is too small to affect market price.
56)
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
57) Assuming a market price of $4, fill in the columns in the following table. What is the
profit-maximizing level of production? What are the two ways to determine the
profit-maximizing level of production?
Total
Revenue
Quantity (TR)
0
1
2
3
4
5
6
7
Total
Cost (TC) Profit
3
5
6
9
14
20
28
40
Marginal
Revenue
(MR)
11
Marginal
Cost (MC)
57)
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Figure 12-2
58) Refer to Figure 12-2. What is the amount of profit if the firm produces Q2 units?
58)
A) It is equal to the vertical distance g to Q2 .
B) It is equal to the vertical distance c to g.
C) It is equal to the vertical distance c to Q2 .
D) It is equal to the vertical distance c to g multiplied by Q2 units.
Figure 12-4
Figure 12-4 shows the cost and demand curves for a profit-maximizing firm in a perfectly competitive market.
59) Refer to Figure 12-4. If the market price is $30 and if the firm is producing output, what is the
amount of its total variable cost?
A) $7,200
B) $6,480
C) $5,400
D) $3,960
12
59)
60) Assume that after a banner year in U.S. farm exports in 2011, farmers are expected to break even in
2012. This means that at the quantity being produced in 2012,
A) MC =AVC.
B) MR =ATC.
C) MR =MC.
D) AVC =ATC.
60)
61) A perfectly competitive firm earns a profit when price is
A) equal to minimum average variable cost.
B) equal to minimum average total cost.
C) equal to minimum average fixed cost.
D) above minimum average total cost.
61)
Figure 12-5
Figure 12-5 shows cost and demand curves facing a typical firm in a constant-cost, perfectly competitive industry.
62) Refer to Figure 12-5. If the market price is $20, what is the amount of the firm's profit?
A) $5,400
B) $6,750
C) $8,100
D) $16,200
62)
63) When a perfectly competitive firm finds that its market price is below its minimum average
variable cost, it will sell
A) the output where average total cost equals price.
B) any positive output the entrepreneur decides upon because all of it can be sold.
C) the output where marginal revenue equals marginal cost.
D) nothing at all; the firm shuts down.
63)
64) Max Shreck, an accountant, quit his $80,000-a-year job and bought an existing tattoo parlor from
its previous owner, Sylvia Sidney. The lease has five years remaining and requires a monthly
payment of $4,000. Max's explicit cost amounts to $3,000 per month more than his revenue. Should
Max continue operating his business?
A) Max should continue to run the tattoo parlor until his lease runs out.
B) If Max's marginal revenue is greater than or equal to his marginal cost, then he should stay in
business.
C) Max's explicit cost exceeds his total revenue. He should shut down his tattoo parlor.
D) This cannot be determined without information on his revenue.
64)
13
Figure 12-6
Figure 12-6 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm.
65) Refer to Figure 12-6. At price P1 , the firm would produce
A) Q1 units
B) Q3 units.
C) Q5 units.
65)
D) zero units.
66) Refer to Figure 12-6. Identify the firm's short-run supply curve.
A) the marginal cost curve
B) the marginal cost curve from a and above
C) the marginal cost curve from b and above
D) the marginal cost curve from d and above
66)
Figure 12-9
67) Refer to Figure 12-9. Suppose the prevailing price is P1 and the firm is currently producing its
loss-minimizing quantity. In the long-run equilibrium,
A) there will be more firms in the industry and total industry output remains constant.
B) there will be fewer firms in the industry and total industry output decreases.
C) there will be fewer firms in the industry but total industry output increases.
D) there will be more firms in the industry and total industry output increases.
14
67)
68) Refer to Figure 12-9. Suppose the prevailing price is P1 and the firm is currently producing its
68)
loss-minimizing quantity. If the firm represented in the diagram continues to stay in business, in
the long-run equilibrium,
A) it will reduce its output to Q0 and face a price of P0 .
B) it will expand its output to Q2 and face a price of P2 .
C) it will continue to produce Q1 but faces the higher price of P2 .
D) it will expand its output to Q3 and face a price of P1 .
69) Refer to Figure 12-6. At price P1 , the firm would
69)
A) lose an amount less than fixed cost.
C) lose an amount more than fixed cost.
B) lose an amount equal to its fixed cost.
D) break even.
70) Refer to Figure 12-6. At price P2 , the firm would produce
A) Q2 units.
B) Q3 units.
C) Q4 units.
71) Refer to Figure 12-6. At price P2 , the firm would
B) lose an amount more than fixed cost.
D) lose an amount less than fixed cost.
72) Refer to Figure 12-6. At price P3 , the firm would produce
B) Q3 units.
C) Q4 units.
73) Refer to Figure 12-6. At price P3 , the firm would
72)
D) Q5 units.
73)
A) break even.
C) lose an amount less than fixed cost.
B) lose an amount equal to its fixed cost.
D) lose an amount more than fixed cost.
74) Refer to Figure 12-6. At price P4 , the firm would produce
A) Q3 units.
D) zero units.
71)
A) lose an amount equal to its fixed cost.
C) break even.
A) Q2 units
70)
B) Q4 units.
C) Q5 units.
75) Refer to Figure 12-6. At price P4 , the firm would
74)
D) Q6 units.
75)
A) lose an amount less than fixed cost.
C) lose an amount equal to its fixed cost.
B) make a normal profit.
D) make a profit.
76) Refer to Figure 12-4. What is the amount of its total fixed cost?
A) $1,080
B) $1,440
C) $2,520
D) It cannot be determined.
76)
77) Refer to Figure 12-4. If the market price is $30 and the firm is producing output, what is the
amount of the firm's profit or loss?
A) loss of $1,080
B) loss of $2,520
C) profit of $1,300
D) profit of $1,440
77)
78) Refer to Figure 12-4. If the market price is $30, should the firm represented in the diagram continue
to stay in business?
A) No, it should shut down because it is making a loss.
B) Yes, because it is covering part of its fixed cost.
C) Yes, because it is making a profit.
D) No, it should shut down because it cannot cover its variable cost.
78)
15
79) Refer to Figure 12-2. The firm breaks even at an output level of
A) Q1 units.
B) Q2 units.
C) Q3 units.
D) Q4 units.
79)
80) Refer to Figure 12-2. What happens if the firm produces more than Q4 units?
80)
81) Refer to Figure 12-2. Why is the total revenue curve a ray from the origin?
A) because the firm must lower its price to sell more
B) because the firm can sell its product at a constant price
C) because revenue increases at an increasing rate
D) because revenue increases at a decreasing rate
81)
82) Both individual buyers and sellers in perfect competition
A) have the market price dictated to them by government.
B) can influence the market price by joining with a few of their competitors.
C) can influence the market price by their own individual actions.
D) have to take the market price as a given.
82)
A) Its total revenue is increasing faster than its total cost.
B) Its profit increases.
C) It could make a profit or a loss depending on what happens to demand.
D) It makes a loss.
16
Answer Key
Testname: SAMPLE_QTIONS_FINAL
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
15)
16)
17)
18)
19)
20)
21)
22)
23)
24)
25)
26)
27)
28)
29)
30)
31)
32)
33)
34)
D
B
D
At the equilibrium price of $7.00:
Consumer surplus is represented by area A + B.
Producer surplus is represented by area C + D + E.
There is no deadweight loss.
At the market price of $5.00:
Consumer surplus is represented by area A + C.
Producer surplus is represented by area E.
Deadweight loss is represented by area B + D.
C
D
A
D
B
B
A
D
B
C
C
C
B
D
B
D
C
C
B
D
D
C
C
C
A
D
C
B
A
A
17
Answer Key
Testname: SAMPLE_QTIONS_FINAL
35) Quantity of
workers
0
1
2
3
4
5
Quantity of foot
massages per
day
0
10
25
45
60
70
Fixed cost Variable
cost
Total
cost
Average
total cost
$500
500
500
500
500
500
$500
575
650
725
800
875
--575
325
241.67
200
175
$0
75
150
225
300
375
Marginal
cost
--$7.50
5.00
3.75
5.00
7.50
36) C
37) D
38) B
39) D
40) B
41) A
42) B
43) A
44) A
45) D
46) D
47) D
48) D
49) C
50) B
51) D
52) C
53) B
54) C
55) B
56) D
57)
Total
Revenue
Quantity (TR)
Total Cost
(TC)
Profit
Marginal
Marginal
Revenue (MR) Cost (MC)
-----
0
0
3
-3
1
4
5
-1
4
2
2
8
6
2
4
1
3
12
9
3
4
3
4
16
14
2
4
5
5
20
20
0
4
6
6
24
28
-4
4
8
7
28
40
-12
4
12
The profit-maximizing level of production is 3 units, which can be determined by the greatest difference between total
revenue and total cost, which is equal to profit, and can also be determined where marginal revenue is equal to
marginal cost (or marginal revenue is the closest to marginal cost, without being below marginal cost).
18
Answer Key
Testname: SAMPLE_QTIONS_FINAL
58) B
59) D
60) B
61) D
62) B
63) D
64) A
65) D
66) C
67) B
68) B
69) C
70) A
71) D
72) B
73) A
74) B
75) D
76) C
77) A
78) B
79) D
80) D
81) B
82) D
19