Assignment #9 (Chapter 9) - Assignment Essays

question

$108.

answer

Refer to the information provided in the figure at right to answer the question that follows.
If this farmer is maximizing his profits, his TVC is

question

in long-run competitive equilibrium.
making zero profits.

answer

When P = SRMC = SRAC = LRAC, an industry is considered to be:

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incorrect; long run, downward, lower; correct; incorrect; upward, higher

answer

Increasing returns to scale refers to a situation where an increase in a firm's scale of production leads to higher costs per unit produced.
The above statement is ______.

Increasing returns to scale refers to a situation where a firm's ______ average cost curve slopes . Therefore, an increase in the firm's scale of production leads to ____average costs.

Constant returns to scale refers to a situation where an increase in a firm's scale of production has no effect on costs per unit produced. This statement is _____

Decreasing returns to scale refers to a situation where an increase in a firm's scale of production leads to lower costs per unit produced. This statement is _____

Decreasing returns to scale refers to a situation where a firm's long-run average cost curve slopes
______.Therefore, an increase in the firm's scale of production leads to _____ average costs.

question

Disagree. It has an incentive to expand its scale of operation only if it expects to continue to earn profits.
Disagree: It should continue to operate as long as total revenue is greater than variable costs.

answer

For each of the following, decide whether you agree or disagree and explain your answer:

A firm earning positive profits in the short run always has an incentive to increase its scale of operation in the long run.

A firm suffering losses in the short run will continue to operate as long as total revenue at least covers fixed cost.

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True

answer

A firm in a perfectly competitive industry in long-run equilibrium will earn normal returns and zero economic profit.

question

answer

The firm's shut down point is at a price of

question

a firm's long-run average cost curve shifts down when industry output expands.

decreases

answer

Suppose a competitive industry experiences external economies. If so, then:
Furthermore, with external economies, the long-run industry supply curve _________ with output.

question

increase; earn a profit

enter; zero

answer

A perfectly competitive market is in long-run equilibrium. If demand in this market suddenly increases, price will ________ and firms will ________.

A perfectly competitive market is in long-run equilibrium and demand in this market suddenly increases. In this situation, firms will eventually ________ the industry and will ultimately earn ________ economic profits.

question

787.50; 1012.50; 337.50 ; 675; -225.00; loss, continue producing

answer

The representative firm's total revenue (TR) for selling the profit-maximizing level of output is $____

The representative firm's total cost of producing the profit-maximizing level of output is $______

Total fixed cost is $_______
Total variable cost is $_____
Economic profit is $______
This firm is operating at a _____ and should _______
.

question

Assume demand is decreasing in a contracting industry. Also assume that the industry is a constanta constant-cost industry.
1.) Using the line drawing tool, draw and label a new supply line showing the short-run supply adjustment.
2.) Using the point drawing tool, plot and label the new equilibrium point.
3.) Using the line drawing tool, draw and label the long-run industry supply line.

answer

When an increase in a firm's scale of production leads to lower average costs, we say that there are:

question

economies of scale

answer

Refer to the scenario below to answer the following question.
Tom borrowed $40,000 from his parents to open a donut stand. He agrees to pay his parents a 5% yearly return on the money they lent him. His other yearly fixed costs equal $10,000. His variable costs equal $25,000. He sold 40,000 dozen donuts during the year at a price of $2.00 per dozen.
Tom's profit is

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$43,000

answer

Tom borrowed $40,000 from his parents to open a donut stand. He agrees to pay his parents a 5% yearly return on the money they lent him. His other yearly fixed costs equal $10,000. His variable costs equal $25,000. He sold 40,000 dozen donuts during the year at a price of $2.00 per dozen.
Tom's total revenue was

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$80,000

answer

If the price of output is $17, this firm will produce
___ units of output.
The total revenue is ____
The total cost is ___
The firm ___________ in the short run
In the long run, the firm should ____________.

question

5; $8;$79; will operate; expand, because short-run profits are positive.

answer

In the short run,

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firms act to minimize losses or maximize profits.

answer

If this farmer is maximizing profits, his profit will be

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$48

answer

A firm that is breaking even is:

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earning zero economic profit.
earning a normal rate of return.
in an industry that is not attracting new firms

answer

Refer to the information provided in the figure at right to answer the question that follows.
If this farmer is maximizing profits, his total costs will be

question

$132

answer

In a perfectly competitive market in the long run, profits are driven to zero due to which of the following relationships?

question

P* = SRMC = SRAC = LRAC.

answer

The graph to the right shows cost curves of a representative firm in a perfectly competitive industry. Use this graph to answer the following:
The firm will produce ____ units of output.
Total revenue (TR) is $____
This firm is currently earning a profit of $____

question

300; 1500;225

answer

If total revenue is less than total variable cost in a perfectly competitive industry in the short run, firms will tend to exit that industry in the long run.

question

True

answer

Refer to the information provided in the figure at right to answer the question that follows.
This farmer would earn a zero economic profit if price was

question

$10

answer

Suppose demand for wheat is initially D2. If consumer incomes increase, then demand for wheat will shift to _____. This will _____ the equilibrium price of wheat and individual profit maximizing firms will produce _____ bushels of wheat.

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D3; increase; 15

answer

The short-run supply curve of a perfectly competitive firm is:

question

the portion of the marginal cost curve that lies above minimum average variable cost.

answer

Refer to the information provided in the figure at right to answer the question that follows.
This farmer's fixed costs are

question

$24

answer

Refer to the information provided in the figure at right to answer the question that follows.
If this farmer is maximizing profits, his total revenue will be

question

$180

answer

Refer to the information provided in the figure at right to answer the question that follows.
For this farmer to maximize profits he should produce _____ bushels of wheat.

question

answer

Observe the firm's long-run average cost curve shown to the right. Between points A and B, there are:

question

economies of scale

answer

If a firm's economic profit is $0, then it must be true that

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TR equals TC

answer

question

$37,000

answer

Firms that are "breaking even" are

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earning zero economic profits.

answer

A perfectly competitive firm sells pineapples for $4 each. MR = MC at a quantity of 600 units. Average total cost at the profit-maximizing quantity is $2.75. This firm is earning a profit of

A firm that is earning a positive profit in the short run and expects to continue doing so has an incentive to expand its scale of operation in the long run.

question

$750;True

answer

Two college students share an apartment and split the cost of heating, electricity, and rent. They decide to include one more roommate and divide heat, electricity, and rent costs three ways instead of two ways.
If adding the third roommate reduces the amount of money they each pay for utilities and rent each month, this can be described as:

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The following table shows the costs related to a hypothetical firm. Fill in the missing values and assume that this particular firm produces 850units of output and that the market price in this perfectly competitive industry is $6.00.

answer

When an industry enjoys external economies, its long-run supply curve slopes ________ and the industry is called a(n) ________ industry.
Constant-cost industries are industries in which there are no external economies or diseconomies of scale

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increasing returns on scale

answer

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down, decreasing-cost; true

answer

In the short run, a firm in a perfectly competitive industry will minimize its losses by shutting down if:

question

$12,000

answer

In the short run, firm A should
______. In the long run, it should _______
.
In the short run, firm B should
____ In the long run, it should______
.
In the short run, firm C should _____. In the long run, it should ______
.
In the short run, firm D should _____. In the long run, it should______
.
In the short run, firm E should_______
. In the long run, it should______.

In the short run, firm F should_______
. In the long run, it should______

question

total revenue is less than total variable cost.market price falls below the minimum point on the average variable cost (AVC) curve.

answer

This farmer's shutdown point is at a price of

question

shut down, shut down; operate, expands it plant; shut down, shut down; operate, expand its plant; operate, neither shut down nor expand; operate, shut down

answer

Explain why it is possible that a firm with a production function that exhibits increasing returns to scale can run into diminishing returns at the same time.
Increasing returns is a reduction in _______ costs in the ______, while diminishing returns is an increase in _______ costs in the _____.

question

answer

undefined

question

average; long run; marginal; short run

answer

undefined

1 of 40

question

$108.

answer

Refer to the information provided in the figure at right to answer the question that follows.
If this farmer is maximizing his profits, his TVC is

question

in long-run competitive equilibrium.
making zero profits.

answer

When P = SRMC = SRAC = LRAC, an industry is considered to be:

question

incorrect; long run, downward, lower; correct; incorrect; upward, higher

answer

question

answer

question

True

answer

A firm in a perfectly competitive industry in long-run equilibrium will earn normal returns and zero economic profit.

question

answer

The firm's shut down point is at a price of

question

a firm's long-run average cost curve shifts down when industry output expands.

decreases

answer

Suppose a competitive industry experiences external economies. If so, then:
Furthermore, with external economies, the long-run industry supply curve _________ with output.

question

increase; earn a profit

enter; zero

answer

question

787.50; 1012.50; 337.50 ; 675; -225.00; loss, continue producing

answer

question

answer

When an increase in a firm's scale of production leads to lower average costs, we say that there are:

question

economies of scale

answer

question

$43,000

answer

question

$80,000

answer

question

5; $8;$79; will operate; expand, because short-run profits are positive.

answer

In the short run,

question

firms act to minimize losses or maximize profits.

answer

If this farmer is maximizing profits, his profit will be

question

$48

answer

A firm that is breaking even is:

question

earning zero economic profit.
earning a normal rate of return.
in an industry that is not attracting new firms

answer

Refer to the information provided in the figure at right to answer the question that follows.
If this farmer is maximizing profits, his total costs will be

question

$132

answer

In a perfectly competitive market in the long run, profits are driven to zero due to which of the following relationships?

question

P* = SRMC = SRAC = LRAC.

answer

question

300; 1500;225

answer

If total revenue is less than total variable cost in a perfectly competitive industry in the short run, firms will tend to exit that industry in the long run.

question

True

answer

Refer to the information provided in the figure at right to answer the question that follows.
This farmer would earn a zero economic profit if price was

question

$10

answer

question

D3; increase; 15

answer

The short-run supply curve of a perfectly competitive firm is:

question

the portion of the marginal cost curve that lies above minimum average variable cost.

answer

Refer to the information provided in the figure at right to answer the question that follows.
This farmer's fixed costs are

question

$24

answer

Refer to the information provided in the figure at right to answer the question that follows.
If this farmer is maximizing profits, his total revenue will be

question

$180

answer

Refer to the information provided in the figure at right to answer the question that follows.
For this farmer to maximize profits he should produce _____ bushels of wheat.

question

answer

Observe the firm's long-run average cost curve shown to the right. Between points A and B, there are:

question

economies of scale

answer

If a firm's economic profit is $0, then it must be true that

question

TR equals TC

answer

question

$37,000

answer

Firms that are "breaking even" are

question

earning zero economic profits.

answer

question

$750;True

answer

question

answer

question

increasing returns on scale

answer

question

down, decreasing-cost; true

answer

In the short run, a firm in a perfectly competitive industry will minimize its losses by shutting down if:

question

$12,000

answer

question

total revenue is less than total variable cost.market price falls below the minimum point on the average variable cost (AVC) curve.

answer

This farmer's shutdown point is at a price of

question

shut down, shut down; operate, expands it plant; shut down, shut down; operate, expand its plant; operate, neither shut down nor expand; operate, shut down

answer

question

answer

undefined

question

average; long run; marginal; short run

answer

undefined

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