Fair Value

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Exhibit 1

1. (Exhibit 1: Total Product) Between points A and B the marginal product of labor is: A) increasing.
B) zero.
C) falling.
D) infinite.

Ans: C

Exhibit 2:
Total Product and Marginal Product|

Labor per Day| Total Products (units per period)|
0| 0.0|
1| 1.0|
2| 3.0|
3| 7.0|
4| 9.0|
5| 10.0|
6| 10.7|
7| 11.0|
8| 10.5|
2. (Exhibit 2: Total Product and Marginal Product) The marginal product of the second worker is: A) 1.0.
B) 1.5.
C) 2.0.
D) 3.0.

Ans: C

3. Marginal product:
A) can never increase.
B) can only be falling.
C) can be less than zero.
D) never equals average product.

Ans: C

Exhibit 3

4. (Exhibit 3: Short-Run Costs) Curve A is the _______ cost curve. A) average total
B) average variable
C) marginal
D) total

Ans: C

Exhibit 4

5. (Exhibit 4: A Firm's Cost Curves) The curve labeled V represents the firm's _______ curve. A) total cost
B) average total cost
C) marginal cost
D) average variable cost

Exhibit 5

| |
6.| (Exhibit 5: The Market for Carrots) If demand is D1, the price of carrots will be _______ cents, the quantity demanded will be _______ , and the quantity supplied will be _______ . | A)| 20; 100; 90 |

B)| 20; 100; 100 |
C)| 30; 160;160 |
D)| 30; 100; 160 |
Ans:| B|

Exhibit 6

| |
7.| (Exhibit 6: Total Revenue and Cost) The most profitable level of output occurs at quantity: | A)| F. |
B)| K. |
C)| L. |
D)| M. |
Ans:| D|

Exhibit 7

| |
8.| (Exhibit 7: Total Revenue, Total Costs, and Economic Profit) Total revenue and total cost are equal at approximately _______ pounds and $_______ . | A)| 2,000; 1,400 |
B)| 5,000; 1,600 |
C)| 10,000; 2,800 |
D)| 15,000,2,800 |
Ans:| C|

| |
9.| (Exhibit 7: Total Revenue, Total Costs, and Economic Profit) Total revenue and total cost are equal at approximately _______ pounds and $ _______ . | A)| 0; 300 |
B)| 2,000; 1,200 |
C)| 4,500; 1,300 |
D)| 8,300; 2,250 |
Ans:| C|

| |
10.| (Exhibit 7: Total Revenue, Total Costs, and Economic Profit) Economic profit will be the greatest when approximately _______ pounds are sold. | A)| 2,000 |
B)| 4,300 |
C)| 7,300 |
D)| 8,300 |
Ans:| D|

| |
11.| (Exhibit 7: Total Revenue, Total Costs, and Economic Profit) At approximately 4,500 pounds of carrots: | A)| total economic profit is the greatest. |
B)| total revenue is equal to total cost. |
C)| marginal revenue is equal to marginal cost. |
D)| marginal cost is at its maximum. |
Ans:| B|
Exhibit 8

| |
12.| (Exhibit 8: Marginal Decision Rule) If P1 is the market price, and if this firm has decided to produce any output, it should produce: | A)| where MR > MC. |
B)| quantity q2. |
C)| quantity q1 where MR > MC. |
D)| a quantity greater than q1 but less than q2. |
Ans:| B|

| |
13.| (Exhibit 8: Marginal Decision Rule) Given the market price P1, Curve B is the _______ curve. | A)| marginal revenue |
B)| marginal cost |
C)| marginal product |
D)| average fixed cost |
Ans:| A|

| |
14.| (Exhibit 8: Marginal Decision Rule) Economic profit: | A)| exists between q1 and q2. |
B)| exists between the origin and q1. |
C)| exists as a maximum at q1. |
D)| cannot be determined based on information provided. | Ans:| D|

| |
15.| (Exhibit 8: Marginal Decision Rule) To the left of Point C (e.g., at q1): | A)| economic profit is the vertical distance between Curve B and MC. | B)| the firm is not maximizing profits. |

C)| the firm is maximizing profits. |
D)| the firm should produce less. |
Ans:| B|

Exhibit 9

Total Cost for a Perfectly Competitive Firm

Quantity per period| Total Cost|
0| $10 |
1| $16 |
2| $20 |
3| $22 |
4|...
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