Ch. 8 CC Quiz Part 3 - Assignment Essays

question

An example of an opportunity cost that is also an implicit cost is

answer

the value of the business owner's time.

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Explicit costs

answer

require an outlay of money by the firm.

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An example of an explicit cost of production would be the

answer

lease payments for the land on which a firm's factory stands.

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A difference between explicit and implicit costs is that

answer

implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.

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Which of the following would be an example of an implicit cost?

(i)
forgone investment opportunities
(ii)
wages of workers
(iii)
raw materials costs

answer

(i) only

question

Pete owns a shoe-shine business. Which of the following costs would be implicit costs?

(i)
shoe polish
(ii)
rent on the shoe stand
(iii)
wages Pete could earn delivering newspapers
(iv)
interest that Pete's money was earning before he spent his savings to set up the shoe-shine business

answer

(iii) and (iv) only

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Which of the following is an example of an implicit cost?

answer

foregone rent on office space owned and used by the firm

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Foregone investment opportunities are an example of

answer

an implicit cost.

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Walter used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent interest, and borrowed $30,000 from his uncle, whom he pays 3 percent interest per year. Last year Walter paid $25,000 for supplies and had revenue of $60,000. Walter asked Tyler the accountant and Greg the economist to calculate his painting business's costs.

answer

Tyler says his costs are $25,900, and Greg says his costs are $66,500.

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Cody builds mailboxes. If he charges $20 for each mailbox, his total revenue will be

answer

$500 if he sells 25 mailboxes

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The Big Box corporation produced and sold 500 units of output. The average cost of production per unit was $50. Each unit sold for a price of $65. The Big Box corporation's total revenues are

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$32,500.

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Profit is defined as

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total revenue minus total cost.

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Profit is defined as total revenue

answer

minus total cost

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The difference between accounting profit and economic profit is

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implicit costs

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Economic profit is equal to total revenue minus the

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opportunity cost of producing goods and services.

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When calculating a firm's profit, an economist will subtract only

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the opportunity costs from total revenue because these include both the implicit and explicit costs of the firm.

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A production function is a relationship between inputs and

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quantity of output.

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If a firm uses labor to produce output, the firm's production function depicts the relationship between

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the number of workers and the quantity of output.

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Grace is a self-employed artist. She can make 20 pieces of pottery per week. She is considering hiring her sister Kate to work for her. Both she and Kate can make 35 pieces of pottery per week. What is Kate's marginal product?

answer

15 pieces of pottery

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Grace is a self-employed artist. She can make 20 pieces of pottery per week. She is considering hiring her sister Kate to work for her. Kate can make 18 pieces of pottery per week. What would be the total output of Grace's firm if she hired her sister?

answer

38 pieces of pottery

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The marginal product of labor is equal to the

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increase in output obtained from a one unit increase in labor.

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The marginal product of labor can be defined as the change in

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output divided by the change in labor.

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Table 13-1
NumW. TotalOutput. Marginal Product
0 0 ---
1 -- 30
2 -- 40
3 -- 50
4 -- 40
5 -- 30

Refer to Table 13-1. What is total output when 1 worker is hired?

answer

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NumW. TotalOutput. Marginal Product
0 0 ---
1 -- 30
2 -- 40
3 -- 50
4 -- 40
5 -- 30
What is the total output when 3 workers are hired

answer

120

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NumWorker.Total Output.Marginal Product
0 0 --
1 200
2 450
3 600
4 650
What is the marginal product of the first worker?

answer

200 units

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NumWorker.Total Output.Marginal Product
0 0 --
1 200
2 450
3 600
4 650
What is the marginal product of the second worker?

answer

250

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Some costs do not vary with the quantity of output produced. Those costs are called

answer

fixed costs

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Which of the following costs do not vary with the amount of output a firm produces?

answer

fixed costs

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Fixed costs can be defined as costs that

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are incurred even if nothing is produced.

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For a construction company that builds houses, which of the following costs would be a fixed cost?

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All of the above are correct.

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If a firm produces nothing, which of the following costs will be zero?

answer

variable cost

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For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?

answer

All of the above are correct.

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Which of the following is the best example of a variable cost?

answer

monthly wage payments for hired labor

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Total cost can be divided into two types of costs:

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fixed costs and variable costs

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If a firm incurs a total cost of 200, and the firm' fixed cost is 50, what is its variable cost?

answer

150

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If a firm produce zero, its cost must be zero in the short run?

answer

false

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A firm produces 400 units of output at a total cost of $1,200. If fixed costs are $200,

answer

average variable cost is $2.50.

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Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of A

answer

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of B

answer

100

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Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of C

answer

100

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Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of D

answer

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of E

answer

100

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Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of F

answer

150

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Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of G

answer

270

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Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of H

answer

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of I

answer

220

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Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of J

answer

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of L

answer

135

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of M

answer

410

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Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of N

answer

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of O

answer

360

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QuantityOutput Fixed Cost VariableCost
0 20 0
1 20 10
2 20 40
3 20 80
4 20 130
5 20 200
6 20 300
What is the average fixed cost of producing 5 units of output?

answer

question

A key characteristic of a competitive market is that

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producers sell nearly identical products.

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Which of the following is not a characteristic of a competitive market?

answer

entry is limited

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Which of the following is a characteristic of a competitive market?

answer

Buyers and sellers are price takers.

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Who is a price taker in a competitive market?

answer

both buyers and sellers

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In a competitive market, the actions of any single buyer or seller will

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have a negligible impact on the market price.

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Free entry means that

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no legal barriers prevent a firm from entering an industry.

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Which of the following industries is most likely to exhibit the characteristic of free entry?

answer

dairy farming

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When buyers in a competitive market take the selling price as given, they are said to be

answer

price takers

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When firms are said to be price takers, it implies that if a firm raises its price,

answer

buyers will go elsewhere.

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In a competitive market, no single producer can influence the market price because

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many other sellers are offering a product that is essentially identical.

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One of the defining characteristics of a perfectly competitive market is

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a similar product.

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A seller in a competitive market can

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sell all he wants at the going price, so he has little reason to charge less.

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Refer to Table 14-6. What is the total revenue from selling 4 units?

answer

$480

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Refer to Table 14-6. What is the marginal revenue from selling the 3rd unit?

answer

120

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Which of the following statements is correct?

answer

Only for competitive firms does average revenue equal marginal revenue.

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Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct?

(i)
Marginal revenue equals $5.
(ii)
Average revenue equals $5.
(iii)
Price equals $5.

answer

(i), (ii), and (iii)

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For a firm in a perfectly competitive market, the price of the good is always

answer

equal to marginal revenue.

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For a purely competitive firm:

answer

the demand, marginal revenue , and avarage revenue curves will coincide.

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For a purely competitive seller, price equals:

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all of these

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Marginal revenue is the:

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change in total revenue associated with the sale of one more unit of output.

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A perfectly elastic demand curve implies that the firm:

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can sell as much output as it chooses at the existing price

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The horizontal demand faced by a perfectly competitive firm reflects which market characteristics of the market

answer

price taker

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Billy Bob runs a seafood restaurant. Last year he earned $50,000 in revenue. He had explicit costs of $20,000. Billy Bob could have made $30,000 working for the county and could have received an additional $20,000 if he rented out his building and equipment. Calculate Billy Bob's accounting profit.

answer

30,000

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accounting profit = total revenues - explicit costs

answer

...

question

answer

50,000

question

answer

-20,000

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economic profit = total revenues - (explicit costs + implicit costs)

answer

...

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Dasenbrock and Gauss farms are able to achieve huge cost savings as they increase their acreage. This would be referred to in economics as

answer

achieving economies of scale.

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Diminishing marginal product refers to marginal product that often initially _____ but eventually ______.

answer

increases; decreases

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Explicit costs are called _____ costs and implicit costs are _____ costs.

answer

out-of-pocket; opportunity

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In the example presented by this graph, at what number of workers does the point of diminishing marginal product occur?

answer

fourth worker

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In the example presented by this graph, what is total output when the fifth worker is added?

answer

52 meals served per hour

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In the long run, costs are

answer

variable only

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Laronda went into the business of producing and selling greeting cards. For this business, which of the following is likely to be a fixed cost?

answer

the 6-month lease for the factory

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Profits and losses are determined by

answer

subtracting total costs from total revenue.

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The cost of a firm's inputs increased by 40%. As a result, output increased by 25%. This firm experienced

answer

diseconomies of scale

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The increasing returns to hiring the first workers exist because of

answer

diminishing marginal costs

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The table below lists costs for producing Big Macs, a product of McDonald's. Based on the table, what are total fixed costs associated with Big Mac production?

answer

100

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Which of the following is a factor of production?

answer

capital

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Which of the following is an explicit cost for a business owner?

answer

a worker's salary

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In this large business, we see that there are a total of ____________ supervisors and managers (including the owner).

answer

question

The large firm has 14.9% reduced productivity, and the small firm has 10% reduced productivity. If everything else is constant, what can we say about the cost structures in this industry?

answer

The firms in this industry have diseconomies of scale.

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This large business has 127 employees, 19 of whom are managers or supervisors; its reduced productivity is 19 ÷ 127 = 14.9%. Consider a "Super-Large Business" that's larger than the business shown below. It has 270 workers, 30 supervisors, 10 line managers, 5 division managers, 2 executive managers, and one CEO. Assuming the same conditions as the large and small businesses, what is the reduced productivity for this Super-Large Business?

answer

15.1

question

This large business has 127 employees, 19 of whom are managers or supervisors; its reduced productivity is 19 ÷ 127 = 14.9%. Suppose the executive manager realizes that the business can accomplish the same amount of work with only 3 line managers and 9 supervisors, and lays off the others. Calculate their new reduced productivity level. (Calculate to nearest tenth of a percent.) ______________________%

answer

12.2( To find reduced productivity, divide the total number of managers, which is now 15, by the total number in the workforce, which dropped to 123. 15 ÷ 123 = 0.122 = 12.2%. )

question

A pizza business has the cost structure described below. The firm's fixed costs are $20 per day.
0 20
5 80
10 120
15 150
20 175
25 195
30 210
35 230
40 255
What are the firm's average fixed costs at an output of five pizzas?

answer

question

A pizza business has the cost structure described below. The firm's fixed costs are $20 per day.
0 20
5 80
10 120
15 150
20 175
25 195
30 210
35 230
40 255
What are the firm's average variable costs at an output of 25 pizzas?

answer

7.0

question

A pizza business has the cost structure described below. The firm's fixed costs are $20 per day.
0 20
5 80
10 120
15 150
20 175
25 195
30 210
35 230
40 255
What are the firm's average total costs at an output of 10 pizzas?

answer

question

A pizza business has the cost structure described below. The firm's fixed costs are $20 per day.
0 20
5 80
10 120
15 150
20 175
25 195
30 210
35 230
40 255
What are the firm's marginal costs at an output of 35 pizzas?

answer

question

A semiprofessional baseball team near your town plays two home games each month at the local baseball park. They split the concessions 50/50 with the city, but keep revenue from ticket sales for themselves. The city charges the team $100 each month for the three-month season. The team pays the players and manager a total of $1,000 a month. The team charges $10 for each ticket, and the average customer spends $7 at the concession stand. Attendance averages 30 people at each home game.

In order to break even, how many tickets does the team need to sell for each game?

answer

question

As a waiter you earn $60,000 per year, including tips. Someone offers you a new job as an economic consultant, which pays $100,000 per year. In order to be a consultant, you'll need to rent an office and purchase supplies and new computer equipment. We can conclude which of the following?

answer

If the explicit cost for the consulting job is $25,000 per year, your economic profit is equal to $15,000.

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If the average total costs is falling,

answer

the marginal cost curve must be below the average total cost curve.

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The cookie company in the mall hires workers to produce cookies. The workers are paid $75 per day, and the cost of renting the space in the mall is $250 per day. The fixed costs of production are

answer

250

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The cookie company in the mall hires workers to produce cookies. The workers are paid $75 per day, and the cost of renting the space in the mall is $250 per day. If two workers are hired, the variable costs are

answer

150

question

The cookie company in the mall hires workers to produce cookies. The workers are paid $75 per day, and the cost of renting the space in the mall is $250 per day.
workers output
1 200
2 400
3 600
4 700
The total costs when three workers are hired is

answer

475

question

The following table shows a short-run production function for laptop computers. Use the data to determine where diminishing product begins.
0 0
1 50
2 120
3 200
4 260
5 310
6 325
7 320
8 310
Diminishing product begins after you hire worker number _____.

answer

question

The local ice cream shop is trying to figure out how many workers to hire, and part of the decision will be based on the marginal product of labor. The following table shows a short-run production function for quantity of ice cream tubs produced. Diminishing marginal returns begins after hiring which worker?
1 110
2 200
3 270
4 300
5 320
6 330
7 300

answer

second

question

The marginal cost curve

answer

intersects the ATC at its minimum point.

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Which of the following statements is true?

answer

The AFC curve can never rise.

question

Still need to add homework 13, quiz 9.1 and 9.2

answer

...

question

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then

answer

a one-unit increase in output will increase the firm's profit.

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If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then

answer

a one-unit decrease in output will increase the firm's profit

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At the profit-maximizing level of output,

answer

marginal revenue equals marginal cost.

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The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which

answer

profit is maximized.

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Table 14-7
Suppose that a firm in a competitive market faces the following revenues and costs:
Marginal Marginal
Quantity Cost Revenue
12 $5 $9
13 $6 $9
14 $7 $9
15 $8 $9
16 $9 $9
17 $10 $9
Refer to Table 14-7. If the firm is currently producing 14 units, what would you advise the owners?

answer

increase quantity to 16 units

question

Refer to Table 14-12. At what quantity does Bill maximize profits?

answer

question

Refer to Figure 14-1. The firm will earn a positive economic profit in the short run if the market price is

answer

above 6.3

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Refer to Figure 14-4. When price falls from P3 to P1, the firm finds that it

answer

should shut down immediately.

question

A perfectly competitive firm can sell its output for the market price of 8 dollars. Its short run cost function is given as TC = 3000 + Q + 0.005Q*Q, where MC = 1+ 0.01Q, what is this firm's AR?

answer

question

A perfectly competitive firm can sell its output for the market price of 8 dollars. Its short run cost function is given as TC = 3000 + Q + 0.005Q*Q, where MC = 1+ 0.01Q, what is this firm's MR?

answer

question

A perfectly competitive firm can sell its output for the market price of 8 dollars. Its short run cost function is given as TC = 3000 + Q + 0.005Q*Q, where MC = 1+ 0.01Q, what is this firm's profit maximization output?

answer

700

question

A perfectly competitive firm can sell its output for the market price of 8 dollars. Its short run cost function is given as TC = 3000 + Q + 0.005Q*Q, where MC = 1+ 0.01Q, what is the firm's maximized profit?

answer

-550

question

answer

6150

question

A perfectly competitive firm can sell its output for the market price of 8 dollars. Its short run cost function is given as TC = 3000 + Q + 0.005Q*Q, where MC = 1+ 0.01Q. This firm's profit margin given by the difference between price and ATC is

answer

negative

question

In the short-run, a firm's supply curve is equal to the

answer

marginal cost curve above its average variable cost curve.

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In a perfectly competitive market, the market supply curve is

answer

the horizontal sum of all the individual firms' supply curves

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When existing firms in a competitive market are profitable, an incentive exists for

answer

new firms to enter the market, even without government subsidies.

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Entry into a market by new firms will increase the

answer

supply of the good

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If firms are competitive and profit maximizing, the price of a good equals the

answer

marginal cost of production.

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When new firms have an incentive to enter a competitive market, their entry will

answer

drive down profits of existing firms in the market.

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The production decisions of perfectly competitive firms follow one of the Ten Principles of Economics, which states that rational people

answer

think at the margin.

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Profit maximizing firms in competitive industries with free entry and exit face a price equal to the lowest possible

answer

average total cost of production.

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A firm should shut down if

answer

TR<VC

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A firm should shut down if

answer

P <= min AVC

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A competitive firm maximizes profit at an output level of 500 units, market price is $24, and ATC is $24.50. At what range of AVC values for an output level of 500 would the firm choose not to shut down?

answer

AVC < $24

question

Converse, an apparel company, has been fairly successful selling denim-colored college sportswear. Lydia sees an opportunity for profit and enters the market. After producing her profit maximizing level of output, she finds that her average total cost per unit is $40, her average variable cost per unit is $30, and the market price is $35. In the short run, Lydia should

answer

stay in business even though she is suffering a loss

question

Firms producing an identical product in a competitive market are producing at a level of output that maximizes profit. The current market price is $4.50 per unit and the firms are producing at a long-run average cost of $3.50 per unit. Over the long-run one should expect

answer

entry of new firms into this market

question

Firms producing an identical product in a perfectly competitive market are producing at a quantity that maximizes profit. The current market price is $4.50 per unit, and the firms are producing at a long-run average cost of $3.50 per unit. Firms in this market experience

answer

a profit

question

For a perfectly competitive firm, marginal revenue is

answer

equal to price

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If competitive firms experience a loss, over the long run there will be a(n)

answer

decrease in market supply to increase the market price

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In a perfectly competitive market, the long-run market supply curve is

answer

horizontal at the market price

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In a perfectly competitive market, the price of the product is

answer

set by market supply and demand

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Profits when a competitive firm shuts down are -$7,250 and profits are -$250 when the firm continues to produce. This firm will minimize losses by

answer

continuing to produce

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The price of a competitive firm's product is $50 per unit. The firm currently has marginal cost equal to $40. To maximize profits this firm

answer

should increase its output

question

To maximize profits, firms expand output until

answer

MR = MC

question

Which of the following types of firm most closely fits the description of a competitive firm?

answer

corn farmers

question

Which of the new stadiums has seen the biggest increase in attendance?

answer

Philadelphia

question

A firm is experiencing a loss of $5,000 per year when operating. The firm has fixed costs of $8,000 per year. The firm should _________ in the short run and should _________ in the long run.

answer

operate; shut down

question

A local snow cone business sells snow cones in one size for $5. It has the following cost and output structure per hour. To maximize profit, the firm should produce how many snow cones per hour?

answer

question

A producer would decide to produce in a competitive market in which she will earn zero profit in the long run because

answer

at zero profit, her revenue will cover all her costs, both explicit and implicit (opportunity cost).

question

Suppose the firm whose demand and cost curves are represented in the table above operates in a perfectly competitive market. What is the profit-maximizing output?

answer

question

At what price is the firm making an economic profit?

answer

question

At what price is the firm breaking even?

answer

question

At what price is the firm experiencing an economic loss?

answer

question

Which of the following can be considered a competitive market?

answer

international market for coffee beans

question

Which of the following can be considered a competitive market?

answer

...

question

At what price is the firm experiencing an economic loss?

answer

question

At what price is the firm breaking even?

answer

question

At what price is the firm making an economic profit?

answer

question

Suppose the firm whose demand and cost curves are represented in the table above operates in a perfectly competitive market. What is the profit-maximizing output?

answer

question

A producer would decide to produce in a competitive market in which she will earn zero profit in the long run because

answer

at zero profit, her revenue will cover all her costs, both explicit and implicit (opportunity cost).

question

A local snow cone business sells snow cones in one size for $5. It has the following cost and output structure per hour. To maximize profit, the firm should produce how many snow cones per hour?

answer

question

A firm is experiencing a loss of $5,000 per year when operating. The firm has fixed costs of $8,000 per year. The firm should _________ in the short run and should _________ in the long run.

answer

operate; shut down

question

Which of the new stadiums has seen the biggest increase in attendance?

answer

Philadelphia

question

Which of the following types of firm most closely fits the description of a competitive firm?

answer

corn farmers

question

To maximize profits, firms expand output until

answer

MR = MC

question

The price of a competitive firm's product is $50 per unit. The firm currently has marginal cost equal to $40. To maximize profits this firm

answer

should increase its output

question

Profits when a competitive firm shuts down are -$7,250 and profits are -$250 when the firm continues to produce. This firm will minimize losses by

answer

continuing to produce

question

In a perfectly competitive market, the price of the product is

answer

set by market supply and demand

question

In a perfectly competitive market, the long-run market supply curve is

answer

horizontal at the market price

question

If competitive firms experience a loss, over the long run there will be a(n)

answer

decrease in market supply to increase the market price

question

For a perfectly competitive firm, marginal revenue is

answer

equal to price

question

answer

a profit

question

answer

entry of new firms into this market

question

answer

stay in business even though she is suffering a loss

question

answer

AVC < $24

question

A firm should shut down if

answer

...

question

A firm should shut down if

answer

TR<VC

question

Profit maximizing firms in competitive industries with free entry and exit face a price equal to the lowest possible

answer

average total cost of production.

question

answer

negative

question

answer

6150

question

answer

-550

question

A perfectly competitive firm can sell its output for the market price of 8 dollars. Its short run cost function is given as TC = 3000 + Q + 0.005Q*Q, where MC = 1+ 0.01Q, what is this firm's MR?

answer

question

answer

...

question

When new firms have an incentive to enter a competitive market, their entry will

answer

...

question

The production decisions of perfectly competitive firms follow one of the Ten Principles of Economics, which states that rational people

answer

think at the margin

question

Features/characteristics of a competitive market
-many sellers
-similar products
-free entry and exist
-price taking

Examples of a (perfectly) competitive market
-stock market
-farmers market
-online ticket action
-currency trading

Supply curve = MC when price is...
...above the minimum point on the average variable cost. Below that point, the firm shuts down and no supply exists

Equation for: Total Revenue
TR= price x quanity (p x q)

Equation for: Total Cost
TC= variable cost x fixed cost (vc x fc)

Equation for: Profit
Profit= TR-TC

Equation for: Marginal Revenue
changeTR/change in quantity sold

Equation for: Marginal Cost
MC= changeTC/ changeQ

Equation for: Change in Profit
= P - ATC

answer

...

question

Which of the following industries most closely approximates pure competition?

answer

agriculture

question

A purely competitive seller is:

answer

a price taker

question

Which of the following is not a characteristic of pure competition?

answer

price strategies by firms

question

Which of the following is not a basic characteristic of pure competition?

answer

considerable nonprice competition

question

Which of the following is characteristic of a purely competitive seller's demand curve?

answer

Price and marginal revenue are equal at all levels of output.

question

Refer to the above information. For a purely competitive firm, marginal revenue:

answer

is a straight line, parallel to the horizontal axis.

question

If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue:

answer

will also be $5

question

Price is constant or given to the individual firm selling in a purely competitive market because:

answer

each seller supplies a negligible fraction of total supply.

question

For a purely competitive seller, price equals:

answer

marginal revenue

question

The demand curve in a purely competitive industry is ______, while the demand curve to a single firm in that industry is ______.

answer

downsloping, perfectly elastic

question

The fact that a purely competitive firm's total revenue curve is linear and upsloping to the right implies that:

answer

product price is constant at all levels of output.

question

Which of the following statements is correct?

answer

The demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely competitive industry is downsloping.

question

Marginal revenue is the:

answer

change in total revenue associated with the sale of one more unit of output.

question

Marginal revenue for a purely competitive firm:

answer

is equal to price

question

firms seek to maximize

answer

total profit

question

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating:

answer

marginal revenue and marginal cost.

question

In the short run a purely competitive firm that seeks to maximize profit will produce:

answer

where total revenue exceeds total cost by the maximum amount.

question

A perfect competitive firm has the following cost information:
TC = 800+ 0.5Q+ 0.005Q*Q
MC = 0.5 +0.01Q
If the market price is 10.5 per unit,
How much the firm should price to maximize its profit

answer

1000

question

A perfect competitive firm has the following cost information:
TC = 800+ 0.5Q+ 0.005Q*Q
MC = 0.5 +0.01Q
If the market price is 10.5 per unit,
What is the firm' marginal revenue

answer

10.5

question

A perfect competitive firm has the following cost information:
TC = 800+ 0.5Q+ 0.005Q*Q
MC = 0.5 +0.01Q
If the market price is 10.5 per unit,
What is the maximized profit

answer

4200

1 of 208

question

An example of an opportunity cost that is also an implicit cost is

answer

the value of the business owner's time.

question

Explicit costs

answer

require an outlay of money by the firm.

question

An example of an explicit cost of production would be the

answer

lease payments for the land on which a firm's factory stands.

question

A difference between explicit and implicit costs is that

answer

implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do.

question

Which of the following would be an example of an implicit cost?

(i)
forgone investment opportunities
(ii)
wages of workers
(iii)
raw materials costs

answer

(i) only

question

answer

(iii) and (iv) only

question

Which of the following is an example of an implicit cost?

answer

foregone rent on office space owned and used by the firm

question

Foregone investment opportunities are an example of

answer

an implicit cost.

question

answer

Tyler says his costs are $25,900, and Greg says his costs are $66,500.

question

Cody builds mailboxes. If he charges $20 for each mailbox, his total revenue will be

answer

$500 if he sells 25 mailboxes

question

The Big Box corporation produced and sold 500 units of output. The average cost of production per unit was $50. Each unit sold for a price of $65. The Big Box corporation's total revenues are

answer

$32,500.

question

Profit is defined as

answer

total revenue minus total cost.

question

Profit is defined as total revenue

answer

minus total cost

question

The difference between accounting profit and economic profit is

answer

implicit costs

question

Economic profit is equal to total revenue minus the

answer

opportunity cost of producing goods and services.

question

When calculating a firm's profit, an economist will subtract only

answer

the opportunity costs from total revenue because these include both the implicit and explicit costs of the firm.

question

A production function is a relationship between inputs and

answer

quantity of output.

question

If a firm uses labor to produce output, the firm's production function depicts the relationship between

answer

the number of workers and the quantity of output.

question

answer

15 pieces of pottery

question

answer

38 pieces of pottery

question

The marginal product of labor is equal to the

answer

increase in output obtained from a one unit increase in labor.

question

The marginal product of labor can be defined as the change in

answer

output divided by the change in labor.

question

Table 13-1
NumW. TotalOutput. Marginal Product
0 0 ---
1 -- 30
2 -- 40
3 -- 50
4 -- 40
5 -- 30

Refer to Table 13-1. What is total output when 1 worker is hired?

answer

question

NumW. TotalOutput. Marginal Product
0 0 ---
1 -- 30
2 -- 40
3 -- 50
4 -- 40
5 -- 30
What is the total output when 3 workers are hired

answer

120

question

NumWorker.Total Output.Marginal Product
0 0 --
1 200
2 450
3 600
4 650
What is the marginal product of the first worker?

answer

200 units

question

NumWorker.Total Output.Marginal Product
0 0 --
1 200
2 450
3 600
4 650
What is the marginal product of the second worker?

answer

250

question

Some costs do not vary with the quantity of output produced. Those costs are called

answer

fixed costs

question

Which of the following costs do not vary with the amount of output a firm produces?

answer

fixed costs

question

Fixed costs can be defined as costs that

answer

are incurred even if nothing is produced.

question

For a construction company that builds houses, which of the following costs would be a fixed cost?

answer

All of the above are correct.

question

If a firm produces nothing, which of the following costs will be zero?

answer

variable cost

question

For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?

answer

All of the above are correct.

question

Which of the following is the best example of a variable cost?

answer

monthly wage payments for hired labor

question

Total cost can be divided into two types of costs:

answer

fixed costs and variable costs

question

If a firm incurs a total cost of 200, and the firm' fixed cost is 50, what is its variable cost?

answer

150

question

If a firm produce zero, its cost must be zero in the short run?

answer

false

question

A firm produces 400 units of output at a total cost of $1,200. If fixed costs are $200,

answer

average variable cost is $2.50.

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of A

answer

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of B

answer

100

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of C

answer

100

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of D

answer

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of E

answer

100

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of F

answer

150

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of G

answer

270

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of H

answer

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of I

answer

220

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of J

answer

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of L

answer

135

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of M

answer

410

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of N

answer

question

Q- TC-FC-VC-MC-AFC-AVC-ATC
0 50 50 0 -- -- -- --
1 150 A B C D E F
2 G H I 120 J K L
3 M N O P Q 120 R
What is the Value of O

answer

360

question

QuantityOutput Fixed Cost VariableCost
0 20 0
1 20 10
2 20 40
3 20 80
4 20 130
5 20 200
6 20 300
What is the average fixed cost of producing 5 units of output?

answer

question

A key characteristic of a competitive market is that

answer

producers sell nearly identical products.

question

Which of the following is not a characteristic of a competitive market?

answer

entry is limited

question

Which of the following is a characteristic of a competitive market?

answer

Buyers and sellers are price takers.

question

Who is a price taker in a competitive market?

answer

both buyers and sellers

question

In a competitive market, the actions of any single buyer or seller will

answer

have a negligible impact on the market price.

question

Free entry means that

answer

no legal barriers prevent a firm from entering an industry.

question

Which of the following industries is most likely to exhibit the characteristic of free entry?

answer

dairy farming

question

When buyers in a competitive market take the selling price as given, they are said to be

answer

price takers

question

When firms are said to be price takers, it implies that if a firm raises its price,

answer

buyers will go elsewhere.

question

In a competitive market, no single producer can influence the market price because

answer

many other sellers are offering a product that is essentially identical.

question

One of the defining characteristics of a perfectly competitive market is

answer

a similar product.

question

A seller in a competitive market can

answer

sell all he wants at the going price, so he has little reason to charge less.

question

Refer to Table 14-6. What is the total revenue from selling 4 units?

answer

$480

question

Refer to Table 14-6. What is the marginal revenue from selling the 3rd unit?

answer

120

question

Which of the following statements is correct?

answer

Only for competitive firms does average revenue equal marginal revenue.

question

answer

(i), (ii), and (iii)

question

For a firm in a perfectly competitive market, the price of the good is always

answer

equal to marginal revenue.

question

For a purely competitive firm:

answer

the demand, marginal revenue , and avarage revenue curves will coincide.

question

For a purely competitive seller, price equals:

answer

all of these

question

Marginal revenue is the:

answer

change in total revenue associated with the sale of one more unit of output.

question

A perfectly elastic demand curve implies that the firm:

answer

can sell as much output as it chooses at the existing price

question

The horizontal demand faced by a perfectly competitive firm reflects which market characteristics of the market

answer

price taker

question

answer

30,000

question

accounting profit = total revenues - explicit costs

answer

...

question

answer

50,000

question

answer

-20,000

question

economic profit = total revenues - (explicit costs + implicit costs)

answer

...

question

Dasenbrock and Gauss farms are able to achieve huge cost savings as they increase their acreage. This would be referred to in economics as

answer

achieving economies of scale.

question

Diminishing marginal product refers to marginal product that often initially _____ but eventually ______.

answer

increases; decreases

question

Explicit costs are called _____ costs and implicit costs are _____ costs.

answer

out-of-pocket; opportunity

question

In the example presented by this graph, at what number of workers does the point of diminishing marginal product occur?

answer

fourth worker

question

In the example presented by this graph, what is total output when the fifth worker is added?

answer

52 meals served per hour

question

In the long run, costs are

answer

variable only

question

Laronda went into the business of producing and selling greeting cards. For this business, which of the following is likely to be a fixed cost?

answer

the 6-month lease for the factory

question

Profits and losses are determined by

answer

subtracting total costs from total revenue.

question

The cost of a firm's inputs increased by 40%. As a result, output increased by 25%. This firm experienced

answer

diseconomies of scale

question

The increasing returns to hiring the first workers exist because of

answer

diminishing marginal costs

question

The table below lists costs for producing Big Macs, a product of McDonald's. Based on the table, what are total fixed costs associated with Big Mac production?

answer

100

question

Which of the following is a factor of production?

answer

capital

question

Which of the following is an explicit cost for a business owner?

answer

a worker's salary

question

In this large business, we see that there are a total of ____________ supervisors and managers (including the owner).

answer

question

The large firm has 14.9% reduced productivity, and the small firm has 10% reduced productivity. If everything else is constant, what can we say about the cost structures in this industry?

answer

The firms in this industry have diseconomies of scale.

question

answer

15.1

question

answer

12.2( To find reduced productivity, divide the total number of managers, which is now 15, by the total number in the workforce, which dropped to 123. 15 ÷ 123 = 0.122 = 12.2%. )

question

answer

question

answer

7.0

question

answer

question

answer

question

answer

question

answer

If the explicit cost for the consulting job is $25,000 per year, your economic profit is equal to $15,000.

question

If the average total costs is falling,

answer

the marginal cost curve must be below the average total cost curve.

question

The cookie company in the mall hires workers to produce cookies. The workers are paid $75 per day, and the cost of renting the space in the mall is $250 per day. The fixed costs of production are

answer

250

question

answer

150

question

answer

475

question

answer

question

answer

second

question

The marginal cost curve

answer

intersects the ATC at its minimum point.

question

Which of the following statements is true?

answer

The AFC curve can never rise.

question

Still need to add homework 13, quiz 9.1 and 9.2

answer

...

question

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then

answer

a one-unit increase in output will increase the firm's profit.

question

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then

answer

a one-unit decrease in output will increase the firm's profit

question

At the profit-maximizing level of output,

answer

marginal revenue equals marginal cost.

question

The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which

answer

profit is maximized.

question

answer

increase quantity to 16 units

question

Refer to Table 14-12. At what quantity does Bill maximize profits?

answer

question

Refer to Figure 14-1. The firm will earn a positive economic profit in the short run if the market price is

answer

above 6.3

question

Refer to Figure 14-4. When price falls from P3 to P1, the firm finds that it

answer

should shut down immediately.

question

A perfectly competitive firm can sell its output for the market price of 8 dollars. Its short run cost function is given as TC = 3000 + Q + 0.005Q*Q, where MC = 1+ 0.01Q, what is this firm's AR?

answer

question

A perfectly competitive firm can sell its output for the market price of 8 dollars. Its short run cost function is given as TC = 3000 + Q + 0.005Q*Q, where MC = 1+ 0.01Q, what is this firm's MR?

answer

question

answer

700

question

answer

-550

question

answer

6150

question

answer

negative

question

In the short-run, a firm's supply curve is equal to the

answer

marginal cost curve above its average variable cost curve.

question

In a perfectly competitive market, the market supply curve is

answer

the horizontal sum of all the individual firms' supply curves

question

When existing firms in a competitive market are profitable, an incentive exists for

answer

new firms to enter the market, even without government subsidies.

question

Entry into a market by new firms will increase the

answer

supply of the good

question

If firms are competitive and profit maximizing, the price of a good equals the

answer

marginal cost of production.

question

When new firms have an incentive to enter a competitive market, their entry will

answer

drive down profits of existing firms in the market.

question

The production decisions of perfectly competitive firms follow one of the Ten Principles of Economics, which states that rational people

answer

think at the margin.

question

Profit maximizing firms in competitive industries with free entry and exit face a price equal to the lowest possible

answer

average total cost of production.

question

A firm should shut down if

answer

TR<VC

question

A firm should shut down if

answer

P <= min AVC

question

answer

AVC < $24

question

answer

stay in business even though she is suffering a loss

question

answer

entry of new firms into this market

question

answer

a profit

question

For a perfectly competitive firm, marginal revenue is

answer

equal to price

question

If competitive firms experience a loss, over the long run there will be a(n)

answer

decrease in market supply to increase the market price

question

In a perfectly competitive market, the long-run market supply curve is

answer

horizontal at the market price

question

In a perfectly competitive market, the price of the product is

answer

set by market supply and demand

question

Profits when a competitive firm shuts down are -$7,250 and profits are -$250 when the firm continues to produce. This firm will minimize losses by

answer

continuing to produce

question

The price of a competitive firm's product is $50 per unit. The firm currently has marginal cost equal to $40. To maximize profits this firm

answer

should increase its output

question

To maximize profits, firms expand output until

answer

MR = MC

question

Which of the following types of firm most closely fits the description of a competitive firm?

answer

corn farmers

question

Which of the new stadiums has seen the biggest increase in attendance?

answer

Philadelphia

question

A firm is experiencing a loss of $5,000 per year when operating. The firm has fixed costs of $8,000 per year. The firm should _________ in the short run and should _________ in the long run.

answer

operate; shut down

question

A local snow cone business sells snow cones in one size for $5. It has the following cost and output structure per hour. To maximize profit, the firm should produce how many snow cones per hour?

answer

question

A producer would decide to produce in a competitive market in which she will earn zero profit in the long run because

answer

at zero profit, her revenue will cover all her costs, both explicit and implicit (opportunity cost).

question

Suppose the firm whose demand and cost curves are represented in the table above operates in a perfectly competitive market. What is the profit-maximizing output?

answer

question

At what price is the firm making an economic profit?

answer

question

At what price is the firm breaking even?

answer

question

At what price is the firm experiencing an economic loss?

answer

question

Which of the following can be considered a competitive market?

answer

international market for coffee beans

question

Which of the following can be considered a competitive market?

answer

...

question

At what price is the firm experiencing an economic loss?

answer

question

At what price is the firm breaking even?

answer

question

At what price is the firm making an economic profit?

answer

question

Suppose the firm whose demand and cost curves are represented in the table above operates in a perfectly competitive market. What is the profit-maximizing output?

answer

question

A producer would decide to produce in a competitive market in which she will earn zero profit in the long run because

answer

at zero profit, her revenue will cover all her costs, both explicit and implicit (opportunity cost).

question

A local snow cone business sells snow cones in one size for $5. It has the following cost and output structure per hour. To maximize profit, the firm should produce how many snow cones per hour?

answer

question

A firm is experiencing a loss of $5,000 per year when operating. The firm has fixed costs of $8,000 per year. The firm should _________ in the short run and should _________ in the long run.

answer

operate; shut down

question

Which of the new stadiums has seen the biggest increase in attendance?

answer

Philadelphia

question

Which of the following types of firm most closely fits the description of a competitive firm?

answer

corn farmers

question

To maximize profits, firms expand output until

answer

MR = MC

question

The price of a competitive firm's product is $50 per unit. The firm currently has marginal cost equal to $40. To maximize profits this firm

answer

should increase its output

question

Profits when a competitive firm shuts down are -$7,250 and profits are -$250 when the firm continues to produce. This firm will minimize losses by

answer

continuing to produce

question

In a perfectly competitive market, the price of the product is

answer

set by market supply and demand

question

In a perfectly competitive market, the long-run market supply curve is

answer

horizontal at the market price

question

If competitive firms experience a loss, over the long run there will be a(n)

answer

decrease in market supply to increase the market price

question

For a perfectly competitive firm, marginal revenue is

answer

equal to price

question

answer

a profit

question

answer

entry of new firms into this market

question

answer

stay in business even though she is suffering a loss

question

answer

AVC < $24

question

A firm should shut down if

answer

...

question

A firm should shut down if

answer

TR<VC

question

Profit maximizing firms in competitive industries with free entry and exit face a price equal to the lowest possible

answer

average total cost of production.

question

answer

negative

question

answer

6150

question

answer

-550

question

A perfectly competitive firm can sell its output for the market price of 8 dollars. Its short run cost function is given as TC = 3000 + Q + 0.005Q*Q, where MC = 1+ 0.01Q, what is this firm's MR?

answer

question

answer

...

question

When new firms have an incentive to enter a competitive market, their entry will

answer

...

question

The production decisions of perfectly competitive firms follow one of the Ten Principles of Economics, which states that rational people

answer

think at the margin

question

answer

...

question

Which of the following industries most closely approximates pure competition?

answer

agriculture

question

A purely competitive seller is:

answer

a price taker

question

Which of the following is not a characteristic of pure competition?

answer

price strategies by firms

question

Which of the following is not a basic characteristic of pure competition?

answer

considerable nonprice competition

question

Which of the following is characteristic of a purely competitive seller's demand curve?

answer

Price and marginal revenue are equal at all levels of output.

question

Refer to the above information. For a purely competitive firm, marginal revenue:

answer

is a straight line, parallel to the horizontal axis.

question

If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue:

answer

will also be $5

question

Price is constant or given to the individual firm selling in a purely competitive market because:

answer

each seller supplies a negligible fraction of total supply.

question

For a purely competitive seller, price equals:

answer

marginal revenue

question

The demand curve in a purely competitive industry is ______, while the demand curve to a single firm in that industry is ______.

answer

downsloping, perfectly elastic

question

The fact that a purely competitive firm's total revenue curve is linear and upsloping to the right implies that:

answer

product price is constant at all levels of output.

question

Which of the following statements is correct?

answer

The demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely competitive industry is downsloping.

question

Marginal revenue is the:

answer

change in total revenue associated with the sale of one more unit of output.

question

Marginal revenue for a purely competitive firm:

answer

is equal to price

question

firms seek to maximize

answer

total profit

question

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating:

answer

marginal revenue and marginal cost.

question

In the short run a purely competitive firm that seeks to maximize profit will produce:

answer

where total revenue exceeds total cost by the maximum amount.

question

A perfect competitive firm has the following cost information:
TC = 800+ 0.5Q+ 0.005Q*Q
MC = 0.5 +0.01Q
If the market price is 10.5 per unit,
How much the firm should price to maximize its profit

answer

1000

question

A perfect competitive firm has the following cost information:
TC = 800+ 0.5Q+ 0.005Q*Q
MC = 0.5 +0.01Q
If the market price is 10.5 per unit,
What is the firm' marginal revenue

answer

10.5

question

A perfect competitive firm has the following cost information:
TC = 800+ 0.5Q+ 0.005Q*Q
MC = 0.5 +0.01Q
If the market price is 10.5 per unit,
What is the maximized profit

answer

4200

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