540 section 10 Behind the Supply Curve: Profit, Production, and Costs
Module 53 AP Review
Check Your Understanding
- Suppose a firm can sell as many units of output as it wants for a
price of $15 per unit and faces total costs as indicated in the
table below. Use the optimal output rule to determine the
profit-maximizing level of output for the firm.
QTC
0$2
110
220
333
450
571
2. Use the data from Question 1 to graph the firm’s MCandMR
curves and show the profit-maximizing level of output.
Solutions appear at the back of the book.
Tackle the Test: Multiple-Choice Questions
Use the data in the table provided to answer questions 1–3.
Quantity Total Revenue Total Cost
QTRTC
0 $0 $14
11830
23636
35444
47256
59072
6 108 92
7 126 116
- What is the marginal revenue of the third unit of output?
a. $8
b. $14
c. $18
d. $44
e. $54 - What is the marginal cost of the first unit of output?
a. $0
b. $14
c. $16
d. $18
e. $30- At what level of output is profit maximized?
a. 0
b. 1
c. 3
d. 5
e. 7 - A firm should continue to produce as long as its
a. total revenue is less than its total costs.
b. total revenue is greater than its total explicit costs.
c. accounting profit is greater than its economic profit.
d. accounting profit is not negative.
e. economic profit is at least zero. - A firm earns a normal profit when its
a. accounting profit equals 0.
b. economic profit is positive.
c. total revenue equals its total costs.
d. accounting profit equals its economic profit.
e. economic profit equals its total explicit and implicit costs.