This quiz works best with JavaScript enabled. Home > Economics > Finance > Profit > Profit – Quiz 2 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Profit Quiz 2 (30 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Evan earned $ 300 by doing yard work. His profit was $ 250. How much were his expenses? A) $ 50. B) $ 300. C) $ 250. D) $ 550. Show Answer Correct Answer: A) $ 50. 2. A firm is producing 100 units of output at a total cost of $ 400. The firm's average variable cost is $ 3 per unit. What is the firm's total fixed cost? A) $ 300. B) $ 50. C) $ 1. D) $ 100. Show Answer Correct Answer: D) $ 100. 3. Profit is Maximised when Marginal Cost = Marginal Revenue A) Yes, I understand this from the notes. B) No, I don't understand this from the notes. C) No, I don't understand this, as I have not read the notes. D) None of above. Show Answer Correct Answer: A) Yes, I understand this from the notes. 4. Which is the odd one out? A) Revenue. B) Income. C) Profit. D) Turnover. Show Answer Correct Answer: C) Profit. 5. What cannot be changed in the short run? A) The level of stock held by firms. B) The output of individual firms in an industry. C) Market price of goods. D) The level of technology available. Show Answer Correct Answer: D) The level of technology available. 6. At 100 units of output, a firm's total cost is $ 10, 000. If the firm's total fixed cost is $ 4, 000, its average variable cost is equal to: A) $ 60. B) $ 140. C) $ 40. D) $ 100. Show Answer Correct Answer: A) $ 60. 7. What will impact the gross profit margin? A) Sales price charged remaining the same. B) Cost of sales increase. C) Decrease in operating (other) expenses. D) Increase in operating (other) expenses. Show Answer Correct Answer: B) Cost of sales increase. 8. A firm aiming to maximise sales will produce at an output level where A) FC = 0. B) AR = AC. C) VC < 0. D) MC = MR = TC. Show Answer Correct Answer: B) AR = AC. 9. In the long run the firm can be released from its fixed costs (e.g. by no longer renting a factory) and it will shut down. A) Yes, I understand this from the notes. B) No, I don't understand this from the notes. C) No, I don't understand this, as I have not read the notes. D) None of above. Show Answer Correct Answer: A) Yes, I understand this from the notes. 10. In the long term a firm will produce provided the revenue covers: A) Total costs. B) Variable costs. C) Sales. D) Fixed costs. Show Answer Correct Answer: A) Total costs. 11. What is a firm experiencing if it doubles all its inputs and this results in a tripling of output? A) Diseconomies of scale. B) Decreasing returns to scale. C) Increasing returns to scale. D) Constant returns to scale. Show Answer Correct Answer: C) Increasing returns to scale. 12. Economic profit can be calculated as accounting profit minus which of the following? A) Explicit Costs. B) The cost of lunch daily. C) Fixed Costs. D) Implicit Costs. Show Answer Correct Answer: D) Implicit Costs. 13. In the short run, which of the following costs must continuously decrease as output produced increases? A) Average fixed cost. B) Total fixed cost. C) Average total cost. D) Total variable cost. Show Answer Correct Answer: A) Average fixed cost. 14. When marginal revenue is negative, a fall in price per unit A) Lowers the industry's marginal efficiency scale. B) Raises price of complementary goods. C) Shifts the demand curve to the left. D) Leads to a fall in total revenue. Show Answer Correct Answer: D) Leads to a fall in total revenue. 15. Supernormal profit is also known as abnormal profit A) Yes, I understand this from the notes. B) No, I don't understand this from the notes. C) No, I don't understand this, as I have not read the notes. D) None of above. Show Answer Correct Answer: A) Yes, I understand this from the notes. 16. Profit Maximisation, Sales Growth and increasing Market Share are all examples of what? A) Business objectives. B) Variable costs. C) Fixed costs. D) Economies of scale. Show Answer Correct Answer: A) Business objectives. 17. For a monopolist, when marginal revenue is positive A) The quantity effect outweighs the price effect. B) The price effect outweighs the quantity effect. C) Total revenue is declining at a decreasing rate. D) Total revenue is rising at an increasing rate. Show Answer Correct Answer: A) The quantity effect outweighs the price effect. 18. Where do people buy most goods? A) Stores. B) Farms. C) Trucks. D) Factories. Show Answer Correct Answer: A) Stores. 19. Electricity, Materials used in production, Transporting goods to customers, are all types of:- A) Fixed costs. B) Variable costs. C) Stock items. D) Tangible products. Show Answer Correct Answer: B) Variable costs. 20. A production function explains A) Trade-off between producing one good versus another. B) The amount that a firm is willing to produce and sell at various prices. C) The relationship between inputs and outputs. D) The average production per unit of labour used. Show Answer Correct Answer: C) The relationship between inputs and outputs. 21. Profit equals the total amount of money made minus A) Prices. B) Supply. C) Revenue. D) Expenses. Show Answer Correct Answer: D) Expenses. 22. Which of the following is the equation for Economic Profit? A) Total Revenue-Explicit Costs. B) Total Revenue + Explicit Costs. C) Total Revenue-(Explicit Costs + Implicit costs). D) Total Revenue-(Explicit Costs-Implicit costs). Show Answer Correct Answer: C) Total Revenue-(Explicit Costs + Implicit costs). 23. The marginal revenue curve for a monopolist lies below the demand curve because of A) The price effect. B) The quantity effect. C) Price discrimination. D) The income effect. Show Answer Correct Answer: A) The price effect. 24. As output of a firm increases, the difference between the firm's average total cost and its average variable cost gets smaller because the firm's A) Total cost is increasing. B) Marginal cost is increasing. C) Marginal product of labor is decreasing. D) Average fixed cost is decreasing. Show Answer Correct Answer: D) Average fixed cost is decreasing. 25. If the marginal revenue is less than the marginal cost then to profit maximize a firm should: A) Increase costs. B) Leave output where it is. C) Increase output. D) Reduce output. Show Answer Correct Answer: D) Reduce output. 26. Which of the following ensures that a firm is earning economic profit? A) The price of the good is higher than the firm's average total cost. B) Total revenue is maximised. C) Firm earns an accounting profit. D) Total revenue is higher than explicit cost. Show Answer Correct Answer: A) The price of the good is higher than the firm's average total cost. 27. Short run marginal costs eventually increase because of the effects of: A) Increasing marginal product. B) Increasing fixed costs. C) Diminishing marginal product. D) Diseconomies of scale. Show Answer Correct Answer: C) Diminishing marginal product. 28. What is the definition of Revenue? A) Income from the sales of goods and services. B) Income from the cost of goods and services. C) The money made on products. D) Cash coming into the business. Show Answer Correct Answer: A) Income from the sales of goods and services. 29. The point of maximum profit is the point at which the marginal cost equals the A) Total revenue. B) Market price. C) Marginal revenue. D) Production cost. Show Answer Correct Answer: C) Marginal revenue. 30. Chickens are laying double the eggs but people are buying them twice as often. What happens to the demand of eggs? A) The demand goes up. B) The demand goes down. C) The demand stays the same. D) None of above. Show Answer Correct Answer: C) The demand stays the same. ← PreviousNext →Related QuizzesFinance QuizzesEconomics QuizzesProfit Quiz 1Profit Quiz 3 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books