Page 582 - Krugmans Economics for AP Text Book_Neat

Module 53 AP Review

Solutions appear at the back of the book.
Check Your Understanding

1. Suppose a firm can sell as many units of output as it wants for a 2. Use the data from Question 1 to graph the firm’s MC and MR
price of $15 per unit and faces total costs as indicated in the curves and show the profit-maximizing level of output.
table below. Use the optimal output rule to determine the
profit-maximizing level of output for the firm.
Q TC
0 $2
1 10
2 20
3 33
4 50
5 71

Tackle the Test: Multiple-Choice Questions
Use the data in the table provided to answer questions 1–3. d. $18
Quantity Total Revenue Total Cost e. $30
Q TR TC
3. At what level of output is profit maximized?
0 $0 $14
a. 0
1 18 30
b. 1
2 36 36
c. 3
3 54 44
d. 5
4 72 56
e. 7
5 90 72
4. A firm should continue to produce as long as its
6 108 92
a. total revenue is less than its total costs.
7 126 116
b. total revenue is greater than its total explicit costs.
1. What is the marginal revenue of the third unit of output?
c. accounting profit is greater than its economic profit.
a. $8
d. accounting profit is not negative.
b. $14
e. economic profit is at least zero.
c. $18
5. A firm earns a normal profit when its
d. $44
a. accounting profit equals 0.
e. $54
b. economic profit is positive.
2. What is the marginal cost of the first unit of output?
c. total revenue equals its total costs.
a. $0
d. accounting profit equals its economic profit.
b. $14
e. economic profit equals its total explicit and implicit costs.
c. $16

540 section 10 Behind the Supply Curve: Profit, Production, and Costs