This quiz works best with JavaScript enabled. Home > Economics > Finance > Profit > Profit – Quiz 3 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Profit Quiz 3 (27 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. DVD sales are decreasing because more people are watching shows/movies online. What happens to the demand of DVD's? A) The demand goes up. B) The demand goes down. C) The demand stays the The demand The demand stays the same. D) None of above. Show Answer Correct Answer: B) The demand goes down. 2. How are total costs calculated A) $ fixed \cos t+variable \cos t$. B) $ \frac{variable\ \cos t}{quantity}$. C) $ \frac{fixed\ \cos t}{quantity}$. D) $ \frac{\left(fixed\ \cos t\ +\ variable\ \cos t\right)}{quantity}$. Show Answer Correct Answer: A) $ fixed \cos t+variable \cos t$. 3. When total physical product is at its maximum, marginal physical product must be: A) Less than one. B) Greater than one. C) Equal to zero. D) Equal to one. Show Answer Correct Answer: C) Equal to zero. 4. A perfectly competitive firm is guaranteed to be profitable when it produces a level of output where A) Price is greater than average total cost. B) Marginal revenue is equal to price. C) Price is greater than average variable cost. D) Price is greater than average fixed cost. Show Answer Correct Answer: A) Price is greater than average total cost. 5. Which of the following is not a reason for firms to stay small in size A) Market has a small or niche demand. B) Production of good requires high degree of personalisation. C) Average cost increases as firm expands output. D) MES occurs at a very large output. Show Answer Correct Answer: D) MES occurs at a very large output. 6. An investment purchased at a bank that pays a higher interest rate than both a savings and checking account. There will be a penalty for withdrawing early. A) Certificate of Deposit. B) Stock. C) Certificate of Money. D) Cash on Deposit. Show Answer Correct Answer: A) Certificate of Deposit. 7. Average total cost is minimized by producing the level of output where the marginal cost A) Curve intersects the average total cost curve. B) Curve intersects the fixed cost curve. C) Curve intersects the marginal revenue curve. D) Is minimized. Show Answer Correct Answer: A) Curve intersects the average total cost curve. 8. Who has a job fixing things for people? A) Plumber. B) Mechanic. C) Electrician. D) All of the above. Show Answer Correct Answer: D) All of the above. 9. A perfectly competitive firm is a price-taker because A) Intense competition prevents it from influencing the market price. B) A larger firm sets the price for the industry. C) It produces a differentiated product. D) The government sets its price. Show Answer Correct Answer: A) Intense competition prevents it from influencing the market price. 10. What is the best definition of marginal cost? A) The financial gain from business activity minus expenses. B) The price of producing one additional unit of a good. C) The possible income from producing an additional item. D) The additional income gained from selling an additional good. Show Answer Correct Answer: B) The price of producing one additional unit of a good. 11. What is most likely to rise as a firm expands? A) Energy costs per unit of output. B) The cost of components. C) The rate of interest paid on borrowing. D) The cost of monitoring workers. Show Answer Correct Answer: D) The cost of monitoring workers. 12. According to the monopoly firm's optimal output rule, a monopoly firm should produce the quantity at which marginal cost is equal to A) Total cost. B) Average variable cost. C) Marginal revenue but not price. D) Marginal revenue and price. Show Answer Correct Answer: C) Marginal revenue but not price. 13. Which of the following is most likely to be an input that can be adjusted in the long run, but not in the short run? A) Industrial sized oven that is used to bake bagels. B) The workers in the bakery. C) The yeast, an ingredient, used in the dough. D) Natural gas to power the ovens. Show Answer Correct Answer: A) Industrial sized oven that is used to bake bagels. 14. Which of the following illustrates the concept of internal economies of scale? A) Falling average cost as output increases. B) Falling average cost as the industry expands. C) Falling fixed cost as output increases. D) Rising average cost as output increases. Show Answer Correct Answer: A) Falling average cost as output increases. 15. What is true about marginal product, if total product is maximized? A) Marginal product is negative. B) Marginal product equals zero. C) Marginal product is increasing. D) Marginal products is positive. Show Answer Correct Answer: B) Marginal product equals zero. 16. What is the definition of expenses? A) The money from selling goods and services. B) Cash you are spending in the business. C) Costs of running the business. D) The outgoings relating specifically to vehicles. Show Answer Correct Answer: C) Costs of running the business. 17. Economists distinguish between Normal Profit and Supernormal 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. 18. Represents a piece of ownership in a company A) CD. B) Single Stock. C) Bond. D) Viaticals. Show Answer Correct Answer: B) Single Stock. 19. Casey uses capital and labour in the production of cakes. When Casey doubled the capital and labour he used, he produced twice as many cakes. What did Casey experience? A) Diminishing returns. B) Coordination costs. C) Constant returns to scale. D) Decreasing returns to scale. Show Answer Correct Answer: C) Constant returns to scale. 20. A firm needs to make Normal Profit to Keep Operating in the Long Run 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. 21. Movie ticket prices increase. What happens to the demand? A) The demand goes up. B) The demand goes down. C) The demand stays the same. D) None of above. Show Answer Correct Answer: B) The demand goes down. 22. If a new tax on capital increases a firm's fixed cost of production, which of the following will occur in the short run? A) Marginal cost will increase. B) Average variable cost will increase. C) The profit-maximizing level of output will increase. D) Average total cost will increase. Show Answer Correct Answer: D) Average total cost will increase. 23. If a monopolist is charging a price such that marginal revenue is greater than marginal cost, then the monopolist A) Can improve its profit by reducing its price. B) Can improve its profits by raising its price. C) Will be earning loss. D) Will be earning profit. Show Answer Correct Answer: A) Can improve its profit by reducing its price. 24. Firms can only pursue other objectives apart from profit maximisation if they are making at least normal profit. A) That is a fallacy. B) True. C) False. D) It depends.. Show Answer Correct Answer: B) True. 25. Producers must understand the marginal benefit of making an additional unit, which shows the A) Eventual gain. B) Actual gain. C) Possible gain. D) Unlikely gain. Show Answer Correct Answer: C) Possible gain. 26. By investing in many companies, mutual funds increase the chance of buying stocks that will be A) Risky. B) Aggressive. C) Profitable. D) Equitable. Show Answer Correct Answer: C) Profitable. 27. Profit-maximising output level occurs when MC=MR. This is known as the "MC = MR profit-maximising rule" . 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. ← PreviousRelated QuizzesFinance QuizzesEconomics QuizzesProfit Quiz 1Profit Quiz 2 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books