Question

Producer surplus measures the value between the actual selling price and the:

Group of answer choices

profit-maximization price.

deadweight loss price.

price sellers are willing to sell the product.

lowest price sellers are willing to sell the product.

When the opportunity cost of producing carrots increases as more carrots are produced, then:

Group of answer choices

the production possibilities curve is a straight line.

resources are equally suited to the production of carrots and to other goods.

no more carrots will be produced.

the law of increasing costs is present.

the production possibilities curve becomes positively sloped.

When Pepsi is considering a price hike, it needs to consider how Coke may react. This situation is called:

Group of answer choices

mutual interdependence.

collusion.

monopolistic competition.

price leadership.

Profit is maximized when which of the following conditions occurs?

Group of answer choices

Both b. and c. above are correct.

Marginal revenue equals marginal cost.

Average revenue equals average cost.

Total revenue equals total cost.

"I'm tired of eating muffins for breakfast. Today, I'm trying a bagel." These statements most clearly reflect the:

Group of answer choices

law of increasing returns to scale.

law of comparative advantage.

second law of demand.

law of diminishing marginal utility.

Reductions in available resources will cause the production possibilities curve to:

Group of answer choices

expand.

become vertical.

shift inward.

Answer 1

1. Producers surplus is the difference between the actual selling price and the price that the producers are willing to sell.

C. Price sellers are willing to sell the product.

2. If opportunity cost increase as more units are produced, there is the presence of increasing cost.

D. the law of increasing cost is present.

3. When there is a mutual interdependence one firm has to consider the reaction of the rival firms.

A. mutual interdependence.

4. The profit is maximized when a firm’s marginal revenue is equal to marginal cost (MR=MC).

B. Marginal revenue equals marginal cost.

5. When the marginal utility diminishes the consumers reduce the consumption of a good. As more and more unit of a commodity is consumed, the additional utility derives from the successive units decreases.

D. The law of diminishing marginal utility.

6. The production possibility curve shows the various combinations of two goods that can be produced with available resources and a given technology. If the resource increase the production possibility curve shift outward. When the resource decreases it shift inward.

C. shift inward.