25) Suppose that at Jones & Smith Shoe Factory, the marginal cost of making a pa

Question

25) Suppose that at Jones & Smith Shoe Factory, the marginal cost of making a pair of shoes is $15 and average variable
cost is $15. For the next pair of shoes produced marginal cost will be ________ $15 and average variable cost will be
________ $15. 25) ______
A) greater than; less than B) less than; greater than
C) less than; less than D) greater than; greater than

26) The added revenue that a firm earns from selling an additional unit of output is: 26) ______
A) marginal revenue. B) total revenue.
C) variable revenue. D) fixed revenue.

27) If a restaurant charges seniors one price and nonseniors another price, the restaurant will apply the marginal
principle: 27) ______
A) once, because the two groups have the same demands.
B) twice, because the two groups have different demands.
C) only to the seniors because they consume the most.
D) by averaging the price charged to both groups.

28) At the market equilibrium, resources are allocated efficiently because:28) ______
A) the price buyers pay accurately reflects the marginal cost of the resources used to produce the good.
B) the price buyers pay is greater than sellers' willingness to sell.
C) the marginal cost of producing another unit is equal to zero.
D) all of the above

29) Suppose that the quantity supplied of cars exceeds the quantity of cars demanded. We would expect that: 29)
______
A) the demand will decrease to meet the supply.
B) the price of cars will increase.
C) the supply will increase to meet the demand.
D) the price of cars will decrease.

Explanation / Answer

25. D) greater than; greater than

26. A) marginal revenue

27. B) twice, because the two groups have different demands

28. A) the price buyers pay accurately reflects the marginal cost of the resources used to produce the good

29. D) the price of cars will decrease.

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