1. A wheat farmer operating in the short run produces 100 bushels of wheat. Her average total cost per bushel is $1.75, total revenue is $450, and (total) fixed costs are equal to $100. Then:
A. economic profit is equal to $250.
B. average variable cost is equal to $1.25.
C. profit per bushel is equal to $2.75.
D. average fixed cost is equal to $1.50.

2. Linda runs a bakery. Suppose that when the market price is $5, the profit-maximizing output level of pastries is 150 units. From this we know Linda's marginal cost is ________, and her profits are ________.
A. $1; $300
B. $1; $150
C. $5; $300
D. $5; $150

3. Alan decides to go on an extended summer vacation in Europe, rather than take a summer job. Which of the following would be considered an implicit cost of this decision?
A. the income earned from the summer job
B. the cost of a Eurail pass
C. the cost of his airline ticket
D. fees charged by the youth hostels in which he stays

4. Which of the following is true of the relationship between accounting profit and economic profit?
A. Economic profit is less than accounting profit if implicit costs exist.
B. Economic profit is always equal to accounting profit.
C. Economic profit is greater than accounting profit if implicit costs exist.
D. Economic profit is less than accounting profit if implicit costs are zero.

5. Suppose a firm is attempting to maximize profits. If the firm sells 300 units of output at a market price of $1 per unit, its marginal revenue is:
A. $300.
B. more than $1 but less than $300.
C. less than $1.
D. $1.

6. Suppose a firm is attempting to maximize profits. If the firm increases production from 10 units to 11 units, and the market price is $20 per unit, total revenue for 11 units is:
A. $20.
B. $200.
C. $220.
D. $10.

7. For a firm that is profit-maximizing, marginal revenue:
A. equals the market price.
B. is the change in quantity divided by the change in total revenue.
C. is the price divided by the change in quantity.
D. is the slope of the average revenue curve.

10. For a firm producing at any level of output greater than the most profitable one, a reduction in output decreases:
A. total revenue but not total cost.
B. total revenue by the same amount as total cost.
C. total cost more than total revenue.
D. total revenue more than total cost.

11. Suppose a firm can increase its profits by increasing its output. Then it must be the case that the firm's:
A. price exceeds its marginal revenue.
B. marginal cost exceeds its marginal revenue.
C. marginal revenue exceeds its marginal cost.
D. price exceeds its average variable cost, but is less than average total cost.

13. At 47 units of labor, a firm finds that average product of labor equals 39.6 and marginal product of labor equals 32.9. We can conclude that the average product curve at 47 units of labor is:
A. vertical.
B. horizontal.
C. upward-sloping.
D. downward-sloping.

14. The marginal product of labor is all of the following except:
A. is the change in output resulting from a one-unit change in labor.
B. can be positive at some levels of input and negative at others.
C. is the slope of the total product curve.
D. total product divided by labor.

15. When a firm experiences diminishing marginal returns:
A. its output is falling.
B. total product is going down, as marginal product is falling.
C. marginal product is negative.
D. marginal product is falling, yet it is still positive.