Chapter 6, ECON HOMEWORK 8 MIDTERM TEST, CHAPTER 5

question

An industry comprised of four firms, each with about 25 percent of the total market for a product, is an example of:

answer

oligopoly.

question

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

answer

price strategies by firms

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

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

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

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

A firm reaches a break-even point (normal profit position) where:

answer

total revenue and total cost are equal.

question

In the short run, the individual competitive firm's supply curve is that segment of the:

answer

marginal cost curve lying above the average variable cost curve.

question

Assume the XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. This corporation:

answer

is realizing an economic profit of $40.

question

If a purely competitive firm shuts down in the short run:

answer

it will realize a loss equal to its total fixed costs.

question

In the short run, a purely competitive firm will always make an economic profit if:

answer

P > ATC.

question

A firm finds that at its MR = MC output, its TC = $1,000, TVC = $800, TFC = $200, and total revenue is $900. This firm should:

answer

produce because the resulting loss is less than its TFC.

question

If a purely competitive firm is producing at some level less than the profit-maximizing output, then:

answer

marginal revenue exceeds marginal cost.

question

Assume for a competitive firm that MC = AVC at $12, MC = ATC at $20, and MC = MR at $16. This firm will:

answer

minimize its losses by producing in the short run.

question

If a purely competitive firm is maximizing economic profit:

answer

it may or may not be maximizing per-unit profit

question

Pure monopolists may obtain economic profits in the long-run because:

answer

of barriers to entry

question

A natural monopoly occurs when

answer

long-run average costs decline continuously through the range of demand

question

What do economies of scale, the ownership of essential raw materials, and patents have in common?

answer

They are all barriers to entry

question

The non-discriminating pure monopolist's demand curve

answer

is the industry demand curve

question

Price: Quantity Demanded
$7 1
6 2
5 3
4 4
3 5

Refer to the data. The marginal revenue obtained from selling the third unit of output is:

answer

question

The marginal revenue curve for a monopolist becomes _________when output increases beyond some particular level

answer

negative

question

The pure monopolist's demand curve is relatively elastic:

answer

in the price range where marginal revenue is postive

question

A pure monopolist should never produce in the:

answer

inelastic segment of its demand curve because it can increase total revenue and reduce total cost by increasing price

question

A pure monopolist is selling six units at a price of $12. If the marginal revenue of the seventh unit is $5 then the:

answer

price of the seventh unit is $11

question

The MR=MC rule:

answer

applies both to pure monopoly and pure competition

question

Suppose that a pure monopolist can sell 4 units of output at $2 per unit and 5 units at $1.75 per unit. The monopolist will produce and sell the fifth unit if its marginal cost is:

answer

$0.75 or less

question

A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing:

answer

an economic profit that could be increased by producing more output

question

If a monopolist's marginal revenue is $3.00 and its marginal cost is $4.50 it will increase its profits by:

answer

reducing output and raising price

question

A pure monopolist

answer

will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output

question

If a pure monopolist is producing at that output where P = ATC, then:

answer

its economic profits will be zero

question

The supply curve of a pure monopolist:

answer

does not exist because prices are not "given" to a monopolist.

question

An important economic problem associated with pure monopoly is that, at the profit-maximizing outputs, resources are:

answer

under-allocated because price exceeds marginal cost.

question

Forgone rent from the building owned and used by Company X.

answer

Which of the following is most likely to be an implicit cost for Company X?

question

total explicit costs

answer

Accounting profits equal total revenue minus:

question

profits were zero and its economic losses were $500,000.

answer

Suppose that a business incurred implicit costs of $500,000 and explicit costs of $5 million in a specific year. If the firm sold 100,000 units of its output at $50 per unit, its accounting:

question

A local bakery hires two additional bakers.

answer

Which of the following is a short-run adjustment?

question

AP continues to rise so long as TP is rising.

answer

Which of the following statements concerning the relationships between total product (TP), average product (AP), and marginal product (MP) is not correct?

question

As successive amounts of one resource (labor) are added to fixed amounts of other resources (capital), beyond some point the resulting extra or marginal output will decline.

answer

Which of the following best expresses the law of diminishing returns?

question

marginal product could be either increasing or decreasing.

answer

If in the short run a firm's total product is increasing, then its:

question

Where total product is at a maximum, average product is also at a maximum.

answer

Which of the following is NOT correct?

question

positive and increasing.

answer

When total product is increasing at an increasing rate, marginal product is:

question

change in total cost that results from producing one more unit of output.

answer

Marginal cost is the:

question

$5,000.

answer

Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has average variable costs of $150. The firm's total fixed costs are:

question

Total cost will exceed variable cost.

answer

In the short run, which of the following statements is correct?

question

does not change as total output increases or decreases

answer

Total fixed cost (TFC):

question

MC.

answer

If a firm wanted to know how much it would save by producing one less unit of output, it would look to:

question

When AP is rising AVC is falling, and when AP is falling AVC is rising.

answer

Which of the following holds true?

question

TVC will increase for a time at a diminishing rate, but then beyond some point will increase at an increasing rate.

answer

In the short run:

question

are $1,250.

answer

In the short run the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs:

question

total cost is $270.

answer

Suppose that, when producing 10 units of output, a firm's AVC is $22, its AFC is $5, and its MC is $30. This firm's:

question

rising, then average total cost could be either falling or rising.

answer

If marginal cost is:

question

the average variable cost of 9 units is $10.

answer

If the total variable cost of 9 units of output is $90 and the total variable cost of 10 units of output is $120, then:

1 of 52

question

An industry comprised of four firms, each with about 25 percent of the total market for a product, is an example of:

answer

oligopoly.

question

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

answer

price strategies by firms

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

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

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

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

A firm reaches a break-even point (normal profit position) where:

answer

total revenue and total cost are equal.

question

In the short run, the individual competitive firm's supply curve is that segment of the:

answer

marginal cost curve lying above the average variable cost curve.

question

answer

is realizing an economic profit of $40.

question

If a purely competitive firm shuts down in the short run:

answer

it will realize a loss equal to its total fixed costs.

question

In the short run, a purely competitive firm will always make an economic profit if:

answer

P > ATC.

question

A firm finds that at its MR = MC output, its TC = $1,000, TVC = $800, TFC = $200, and total revenue is $900. This firm should:

answer

produce because the resulting loss is less than its TFC.

question

If a purely competitive firm is producing at some level less than the profit-maximizing output, then:

answer

marginal revenue exceeds marginal cost.

question

Assume for a competitive firm that MC = AVC at $12, MC = ATC at $20, and MC = MR at $16. This firm will:

answer

minimize its losses by producing in the short run.

question

If a purely competitive firm is maximizing economic profit:

answer

it may or may not be maximizing per-unit profit

question

Pure monopolists may obtain economic profits in the long-run because:

answer

of barriers to entry

question

A natural monopoly occurs when

answer

long-run average costs decline continuously through the range of demand

question

What do economies of scale, the ownership of essential raw materials, and patents have in common?

answer

They are all barriers to entry

question

The non-discriminating pure monopolist's demand curve

answer

is the industry demand curve

question

Price: Quantity Demanded
$7 1
6 2
5 3
4 4
3 5

Refer to the data. The marginal revenue obtained from selling the third unit of output is:

answer

question

The marginal revenue curve for a monopolist becomes _________when output increases beyond some particular level

answer

negative

question

The pure monopolist's demand curve is relatively elastic:

answer

in the price range where marginal revenue is postive

question

A pure monopolist should never produce in the:

answer

inelastic segment of its demand curve because it can increase total revenue and reduce total cost by increasing price

question

A pure monopolist is selling six units at a price of $12. If the marginal revenue of the seventh unit is $5 then the:

answer

price of the seventh unit is $11

question

The MR=MC rule:

answer

applies both to pure monopoly and pure competition

question

Suppose that a pure monopolist can sell 4 units of output at $2 per unit and 5 units at $1.75 per unit. The monopolist will produce and sell the fifth unit if its marginal cost is:

answer

$0.75 or less

question

A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing:

answer

an economic profit that could be increased by producing more output

question

If a monopolist's marginal revenue is $3.00 and its marginal cost is $4.50 it will increase its profits by:

answer

reducing output and raising price

question

A pure monopolist

answer

will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output

question

If a pure monopolist is producing at that output where P = ATC, then:

answer

its economic profits will be zero

question

The supply curve of a pure monopolist:

answer

does not exist because prices are not "given" to a monopolist.

question

An important economic problem associated with pure monopoly is that, at the profit-maximizing outputs, resources are:

answer

under-allocated because price exceeds marginal cost.

question

Forgone rent from the building owned and used by Company X.

answer

Which of the following is most likely to be an implicit cost for Company X?

question

total explicit costs

answer

Accounting profits equal total revenue minus:

question

profits were zero and its economic losses were $500,000.

answer

Suppose that a business incurred implicit costs of $500,000 and explicit costs of $5 million in a specific year. If the firm sold 100,000 units of its output at $50 per unit, its accounting:

question

A local bakery hires two additional bakers.

answer

Which of the following is a short-run adjustment?

question

AP continues to rise so long as TP is rising.

answer

Which of the following statements concerning the relationships between total product (TP), average product (AP), and marginal product (MP) is not correct?

question

As successive amounts of one resource (labor) are added to fixed amounts of other resources (capital), beyond some point the resulting extra or marginal output will decline.

answer

Which of the following best expresses the law of diminishing returns?

question

marginal product could be either increasing or decreasing.

answer

If in the short run a firm's total product is increasing, then its:

question

Where total product is at a maximum, average product is also at a maximum.

answer

Which of the following is NOT correct?

question

positive and increasing.

answer

When total product is increasing at an increasing rate, marginal product is:

question

change in total cost that results from producing one more unit of output.

answer

Marginal cost is the:

question

$5,000.

answer

Assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and has average variable costs of $150. The firm's total fixed costs are:

question

Total cost will exceed variable cost.

answer

In the short run, which of the following statements is correct?

question

does not change as total output increases or decreases

answer

Total fixed cost (TFC):

question

MC.

answer

If a firm wanted to know how much it would save by producing one less unit of output, it would look to:

question

When AP is rising AVC is falling, and when AP is falling AVC is rising.

answer

Which of the following holds true?

question

TVC will increase for a time at a diminishing rate, but then beyond some point will increase at an increasing rate.

answer

In the short run:

question

are $1,250.

answer

In the short run the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs:

question

total cost is $270.

answer

Suppose that, when producing 10 units of output, a firm's AVC is $22, its AFC is $5, and its MC is $30. This firm's:

question

rising, then average total cost could be either falling or rising.

answer

If marginal cost is:

question

the average variable cost of 9 units is $10.

answer

If the total variable cost of 9 units of output is $90 and the total variable cost of 10 units of output is $120, then:

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