Eco 561 week 2 knowledge check



ECO 561 Economics week 2 knowledge check Quiz


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. increase production

B. decrease production

C. keep production the same

D. increase price


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. 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. decreases the supply of resources used in its production





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


8. If a firm stars small and, over time, builds successively larger plant sizes or adds additional work space in an office, average total costs are most likely to

A. initially decrease, then begin to rise

B. initially rise, then begin to decrease

C. remain constant over time

D. continually increase


9. Demand for resources, including labor, depend on its

A. productivity

B. profitability

C. availability

D. accessibility


10. The primary difference between increasing- and decreasing-cost industries lies in

A. fixed-cost components: only increasing-cost industries have significant fixed costs

B. variable-cost components: only decreasing-cost industries have significant variable costs

C. the fact that the average total cost (ATC) of firms in increasing-cost industries will first decline and then eventually increase with output, while decreasing-cost firms experience progressively lower ATC with increased output

D. efficiency of production


11. When adding labor or other factors of production, businesses may see their total product rise, but see their per-unit increase in return for each additional unit diminish. This phenomenon

A. occurs only for firms that do not efficiently use their factors of production

B. applies only to capital-intensive industries

C. is known as diminishing marginal product and has general market application

D. depends on how abundant or scarce labor is in existing factor-markets



12. In the short run, firms should shut down if

A. AVC > P

B. ATC > P > AVC

C. P > ATC

D. P > MC


13. When you are considering the value of a resource in its next best use, you are considering its

A. opportunity cost

B. production cost

C. marginal cost

D. price


14. Of the four major market structures–perfectly competitive, monopolistic competition, oligopoly, monopoly–reducing variable costs of production

A. is not a viable option for perfectly competitive firms— or price-takers—because the per-unit profit margin is fixed by the equilibrium price

B. can enhance profit for all but the monopoly firm, which, because it has no competition, has little financial incentive to lower its per-unit costs

C. will result in significant increases in profit-margin, regardless of market structure, if coupled with significant increases in product price

D. enhance profit per-unit, because profit equals revenue minus cost

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10