1.The following table shows the total cost schedule for a competitive firm:

Q 5 6 7 8 9 10

Total Cost $25 $30 $37 $47 $60 $75

If the prevailing market price is $11 per unit, the firm should produce up to ____ units to maximize its profit.

A)6

B)7

C)8

D)9

2.Twenty-First Century Electronics has discovered a theft problem at its warehouse and has decided to hire security guards. The firm wants to hire the optimal number of security guards. The following table shows how the number of security guards affects the number of radios stolen per week.

# of security guards # of stolen per week

0 50

1 30

2 20

3 14

4 8

5 6

If each security guard is paid $200 a week and the cost of a stolen radio is $50, how many security guards should the firm hire for profit maximization?

a)2

b)3

c)4

d)5

3.A country's nominal GDP and CPI (consumer price index) are shown in the following table:

Year 2014 2015 2016

Nominal GDP $5.5 billion $6 billion $7.8 billion

CPI 100 120 140

If we choose the year 2014 as the base year, then the real GDP in 2016 is

a)greater than 2015's real GDP but less than 2014's real GDP.

b)greater than both 2015's real GDP and 2014's real GDP.

c)greater than 2014's real GDP but less than 2015's real GDP

d)less than both 2015's real GDP and 2014's real GDP.

4.if both demand and supply were to decrease, then the equilibrium

a)quantity would rise and price might fall or rise.

b)price would fall and quantity might rise or fall.

c)price would rise and quantity might rise.

d)quantity would fall and price might rise or fall.

5.The following table shows the total cost schedule for a competitive firm:

Q 5 6 7 8 9 10

Total Cost $25 $30 $37 $47 $60 75

If the prevailing market price is $11 per unit, the firm's maximum profit should be _____.

a)$40

b)$41

c)$42

d)$43

6.Demand on your Economics textbook is quite price-inelastic because

a)it has no close substitute.

b)it is expensive.

c)it costs a huge share in students' budget.

d)it takes a whole semester to consume.

7.Which of the following is the best explanation of why the law of diminishing returns does not apply in the long run?

a)In the long run, firms can increase the availability of space and equipment fixed inputs to keep up with the increase in labor.

b)The marginal physical product (MPP) does not change in the long run.

c)In the long run, firms have more time to find better-qualified workers.

d)All factors of production are fixed in the long run.

8.When a firm's marginal cost (MC) is unavailable in decision making for profit-maximization, which of the following can serve as the best alternative forMC?

a)The firm's average variable cost

b)The product's price

c)The labor's marginal physical product.

d)The firm average total cost

9.Assume that Bart and Lisa live on a desert island. With a day's labor, Lisa can produce either 5 fish or 4 coconuts; Bart can produce either 6 fish or 3 coconuts. The unit opportunity cost of fish should be _______ for Bart and ______ for Lisa

a)3 coconuts; 4 coconuts

b)2 fish; 1.25 fish

c)0.5 coconut; 0.8 coconut

d)6 coconuts; 5 fish