Chapter 3 True or False Quiz

. Economic relationships can be expressed as equations, graphs, and schedules.

. If an economic relationship is complex, it must generally be expressed as an equation.

. Differential calculus can be applied directly to the graph of an economic relationship.

. The optimal solution to a problem refers to the best solution.

. For any given total function, the total is always larger than the average and the average is always larger than the marginal.

. The form of the relationship between total, average, and marginal functions is the same whether it is applied to total revenue, product, cost, or profit.

. Total cost is equal to average cost times marginal cost.

. Average revenue is equal to marginal revenue between zero units of output and one unit of output.

. If total cost is increasing, marginal cost is positive.

. If total revenue is decreasing, average revenue is negative.

. If total profit is at a maximum, marginal profit is zero.

. The concept that corresponds most closely to the derivative is the concept of an average value.

. Marginal cost is plotted (as an approximation) halfway between successive units of output.

. If an average value is equal to its corresponding marginal value, the average value must be at either a maximum or a minimum.

. Average revenue reaches a maximum at the same level of sales that total revenue reaches a maximum.

. Marginal revenue reaches a maximum at the same level of output that total revenue reaches a maximum.

. If a straight line that is tangent to total cost passes through the origin of a graph, then the slope of the line is equal to average cost at the point of tangency.

. If a straight line that is tangent to total cost passes through the origin of a graph, then the slope of the line is equal to marginal cost at the point of tangency.

. If a straight line that intersects a total cost line passes through the origin of a graph, then the slope of the straight line is equal to marginal cost at the point of intersection.

. If a firm's marginal revenue is negative, then total revenue will decrease if the firm sells more output.

. The slope of a tangent to a total curve is equal to the marginal value at the point of tangency.

. The inflection point refers to the point where a marginal curve has a slope of zero.

. The point where a total value changes from increasing at an increasing rate to increasing at a decreasing rate is called the inflection point.

. The point where a total value changes from increasing at a decreasing rate to increasing at an increasing rate is called the inflection point.

. If a marginal value is greater than its corresponding average value, the average value must be decreasing.

. If an average value is greater than its corresponding marginal value, the average value must be decreasing.

. If a marginal value is greater than its corresponding average value, the marginal value must be decreasing.

. If a firm is producing a level of output where marginal profit is equal to zero, then the level of output is optimal.

. If a firm's total cost curve is a straight line, then its marginal cost curve will be defined by a horizontal straight line.

. If a firm's total cost curve is a straight line, then its average total cost curve will also be a straight line.

. If a firm's total cost curve is an upward-sloping straight line, then its average total cost curve will slope upward.

. A firm's total profit is generally at a maximum when total revenue is at a maximum.

. A firm's total profit is generally at a maximum when total cost is at a minimum.

. A firm's total profit is generally at a maximum when the firm's average revenue curve is above its average cost curve and the vertical distance that separates the two curves is at a maximum.

. A firm's total profit is generally at a maximum when the firm's total revenue curve is above its total cost curve and the vertical distance that separates the two curves is at a maximum.

. A firm should continue to increase an activity so long as the marginal revenue from the activity exceeds the marginal cost of the activity.

. A firm should continue to increase an activity so long as the total revenue from the activity exceeds the total cost of the activity.

. If marginal revenue is equal to marginal cost, profit must be at a maximum.

. If total cost is equal to total revenue, then profit is equal to zero.

. The optimal amount of pollution is found where the marginal benefit of pollution is equal to the marginal cost of pollution.

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