Pretest

Question 1

What is the difference between marginal cost and marginal revenue?

Revolt · Accepted Answer

Marginal cost is the money paid for producing one more unit of a good. Marginal revenue is the money earned from selling one more unit of a good.

Question 2

What is the best definition of marginal cost?

Revolt · Accepted Answer

the price of producing one additional unit of a good

Question 3

Clark’s Cleaners is a housekeeping service. The company’s expenses include the

Revolt · Accepted Answer

cleaning supplies and any equipment the company purchases.

Question 4

To generate higher profits, producers must work to

Revolt · Accepted Answer

decrease their production costs.

Question 5

In order to calculate marginal cost, producers must compare the difference in the cost of producing one unit to the cost of

Revolt · Accepted Answer

producing the next unit.

Question 6

What is the best definition of marginal revenue?

Revolt · Accepted Answer

the additional income gained from selling an additional good

Question 7

South Avenue Publishing produces self-help books. The company’s profit is the

Revolt · Accepted Answer

money the company earns after paying all of its production costs.

Question 8

What is the best definition of marginal benefit?

Revolt · Accepted Answer

the additional income gained from selling an additional good

Question 9

What is the difference between profit and revenue?

Revolt · Accepted Answer

Revenue is the total amount producers receive after selling a good. Profit is the total amount producers earn after subtracting the production costs.

Question 10

Producers must understand the marginal benefit of making an additional unit, which shows the

Revolt · Accepted Answer

actual gain.

Pretest Answers