Practice Questions
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If a company's marginal revenue is constant at $20 per unit and it sells 100 units, what is its total revenue?
Total revenue is found by multiplying the number of units sold by the marginal revenue per unit. Other options are incorrect because This answer might...
If a company has a total revenue of $5000 from selling 250 units of its product, what is the marginal revenue when they sell one additional unit?
Marginal revenue is how much money a company makes from selling one more unit. Other options are incorrect because This answer suggests that selling o...
If a company faces a downward-sloping demand curve and has fixed costs of $1000, what will happen to its marginal revenue if it increases its output, assuming the demand remains stable?
When a company increases output on a downward-sloping demand curve, it must lower the price to sell more. Other options are incorrect because Some mig...
A firm produces widgets and experiences diminishing returns after a certain level of production. If the fixed costs of production are $1000 and the marginal revenue from selling an additional widget is $50, how will this affect the firm's profit as production increases beyond the point of diminishing returns?
Profit goes up at first, but then it starts to go down after a certain point. Other options are incorrect because Some might think profit keeps rising...
A company produces widgets and sells them for $10 each. If the total revenue from selling 100 widgets is $1,000 and the total cost of production is $800, what is the economic profit of the company?
To find economic profit, subtract total costs from total revenue. Other options are incorrect because This answer may come from adding costs to revenu...
What does marginal revenue represent in a firm's pricing strategy?
Marginal revenue is the extra money a company makes when it sells one more item. Other options are incorrect because This option confuses total revenu...
If a company sells 100 units of a product for $10 each, what is its total revenue?
To find total revenue, multiply the number of units sold by the price per unit. Other options are incorrect because This answer might come from thinki...
What happens to a firm's profit when marginal revenue exceeds marginal cost?
When marginal revenue is higher than marginal cost, the firm makes more money on each extra sale. Other options are incorrect because Some might think...
If a firm hires an additional worker and the marginal revenue product of that worker is $200 while the marginal factor cost is $150, what is the impact on profit?
The extra worker brings in $200, but costs $150. Other options are incorrect because This answer suggests that hiring the worker costs more than it ea...
When hiring an additional worker, if the marginal revenue product exceeds the marginal factor cost, then the firm is likely to experience an increase in _____.
When the extra money made from hiring a worker is more than what it costs to hire them, the firm earns more profit. Other options are incorrect becaus...
If a firm hires an additional worker and finds that the marginal revenue generated is less than the marginal cost of hiring that worker, what is the likely effect on the firm's profit?
When the cost of hiring a worker is higher than the money they bring in, the firm loses money. Other options are incorrect because Some might think th...
Marginal Revenue Product : Hiring Additional Workers :: Marginal Cost : ?
Marginal cost is the extra cost of making one more item. Other options are incorrect because This answer confuses costs with investments; This option ...
A company hires an additional worker who generates a marginal revenue of $500 and incurs a marginal cost of $300. How should the company classify the impact of this decision on its profitability?
The company makes more money than it spends. Other options are incorrect because Some might think costs always outweigh benefits; This choice suggests...
A bakery is considering hiring an additional baker. Currently, each baker generates a marginal revenue of $300 per day, while the marginal cost of hiring that baker is $250 per day. If the bakery hires the additional baker, what will be the impact on their overall profit, and what principle does this demonstrate?
The bakery will make an extra $50 each day. Other options are incorrect because This answer suggests that costs are more important than the money earn...
Order the steps involved in determining whether hiring an additional worker will increase profit for a firm.
First, you need to find out how much extra money the new worker can bring in. Other options are incorrect because Some might think you should compare ...
Which of the following statements accurately describe the relationship between marginal revenue, marginal cost, and profit when hiring additional workers? Select all that apply.
Firms should keep hiring until the extra cost of a worker equals the extra money they make. Other options are incorrect because Many think hiring is g...
A firm is considering hiring an additional worker. If the marginal revenue product of the worker is $300 and the marginal factor cost is $250, what should the firm do?
The firm should hire the worker because the money made from the worker is more than what it costs to hire them. Other options are incorrect because Th...
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