ECON 101
A+ IS ALWAYS GURANTEED
Chuck Diesel Burger is a food truck in Houston, Texas. Imagine that Chuck Diesel Burger's
minimum average of all costs (AC) is $3.75 and that its minimum average cost of variable inputs
is $2.50. Chuck Diesel Burger will make a positive economic profit if the price is equal to: -
Correct Answer $4.00
Steve owns a bike store. His total costs are $1.2 million per year. Last year, Steve sold 1,200
bikes. Steve's average total cost was ________ per bike. -Correct Answer $1,000
When firms exit a market, individual firms' profits: -Correct Answer increase.
Kathleen owns a photography business in Mobile, Alabama. The market for photography is very
competitive. At Kathleen's current production level, her marginal cost is $15 and her marginal
revenue is $12. In order to maximize profits, Kathleen should: -Correct Answer decrease
production.
At current production levels, the marginal revenue of a competitive firm is $15 and the marginal
cost of the firm is $15. The firm should: -Correct Answer continue producing at current levels.
Lauren owns a bakery that produces, among other things, wedding cakes. She currently has 7
employees; with 7 employees, her bakery can produce 12 wedding cakes per day. If she hired an
eighth employee, her bakery would be able to produce 16 wedding cakes per day. Therefore, the
marginal product of the eighth employee is ________ wedding cake(s). -Correct Answer 4
When marginal revenue equals marginal cost: -Correct Answer firms are maximizing profits, so
they should continue at that production level
Chief executive officers (CEOs) of major corporations are often paid mostly with stock options
(which allow the holder to buy stock at a given price), as opposed to salaries and cash payments.
These stock options often cannot be converted into stock and sold until years after they were
issued. All this is ultimately intended to create incentives for the CEO to: -Correct Answer
increase the value of the stock by maximizing company profit
A+ IS ALWAYS GURANTEED
Chuck Diesel Burger is a food truck in Houston, Texas. Imagine that Chuck Diesel Burger's
minimum average of all costs (AC) is $3.75 and that its minimum average cost of variable inputs
is $2.50. Chuck Diesel Burger will make a positive economic profit if the price is equal to: -
Correct Answer $4.00
Steve owns a bike store. His total costs are $1.2 million per year. Last year, Steve sold 1,200
bikes. Steve's average total cost was ________ per bike. -Correct Answer $1,000
When firms exit a market, individual firms' profits: -Correct Answer increase.
Kathleen owns a photography business in Mobile, Alabama. The market for photography is very
competitive. At Kathleen's current production level, her marginal cost is $15 and her marginal
revenue is $12. In order to maximize profits, Kathleen should: -Correct Answer decrease
production.
At current production levels, the marginal revenue of a competitive firm is $15 and the marginal
cost of the firm is $15. The firm should: -Correct Answer continue producing at current levels.
Lauren owns a bakery that produces, among other things, wedding cakes. She currently has 7
employees; with 7 employees, her bakery can produce 12 wedding cakes per day. If she hired an
eighth employee, her bakery would be able to produce 16 wedding cakes per day. Therefore, the
marginal product of the eighth employee is ________ wedding cake(s). -Correct Answer 4
When marginal revenue equals marginal cost: -Correct Answer firms are maximizing profits, so
they should continue at that production level
Chief executive officers (CEOs) of major corporations are often paid mostly with stock options
(which allow the holder to buy stock at a given price), as opposed to salaries and cash payments.
These stock options often cannot be converted into stock and sold until years after they were
issued. All this is ultimately intended to create incentives for the CEO to: -Correct Answer
increase the value of the stock by maximizing company profit
