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Flash Quiz
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1
A price taker confronts a demand curve that is
A)vertical at the market price.
B)upward sloping.
C)downward sloping.
D)horizontal at the market price.
E)elastic.
2
Which of the following firms best represents a price taker?
A)Microsoft.
B)General Motors.
C)The local Taco Bell.
D)A corn farmer in Iowa.
E)The Gap.
3
A profit maximizing perfectly competitive firm must decide
A)only on what price to charge, taking output as fixed.
B)both what price to charge and how much to produce.
C)only on how much to produce, taking price as fixed.
D)only on which industry to join, taking price and output as fixed.
E)only on how much revenue it wishes to collect.
4
When some factors of production are fixed, equal sized increases in production will eventually require
A)smaller increases in the variable factor.
B)equal sized increases in the variable factor.
C)larger increases in the variable factor.
D)larger increases in the fixed factors.
E)higher profits.
5
To produce 150 units of output, the firm must use 3 employee-hours. To produce 300 units of output the firm must use 8 employee-hours. Apparently, the firm is
A)more profitable.
B)experiencing diminishing marginal returns.
C)in the long run.
D)not using any fixed factors of production.
E)failing to profit maximize.
6
Which of the following best explains why wages in service industries have increased along with wages in manufacturing industries, even though service industry productivity has not increased as much? Because
A)the opportunity cost of working in the service industry is the wage in the manufacturing industry
B)the opportunity cost of working in the manufacturing industry is the wage in the service industry
C)the service and manufacturing industry are complements
D)working in the service industry yields much more utility
E)MC > MB for service industry workers
7
A firm's profit is equal to which of the following?
A)the value of its sales
B)marginal revenue minus marginal cost
C)total sales minus wages
D)total revenue minus total cost
E)none of the above
8
Which of the following is not a characteristic of a perfectly competitive firm?
A)perfectly elastic demand curve
B)price taker
C)control over market price
D)many sellers
E)all of the above are characteristics of perfectly competitive firms
9
Which of the following can a firm vary in the long-run?
A)no factors of production
B)all factors of production
C)all but one factor of production
D)only one factor of production
E)more information about the firm is needed to answer this question
10
When the quantity of an input can be altered in the short-run, the input is
A)fixed.
B)variable.
C)implicit.
D)explicit.
E)efficient.





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