question
Economies of scale occur when
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long-run total costs fall as output increases
question
Which of the following curves is most likely to characterize the short run average total cost of the smallest factory?
answer
A. ATCA
question
In a competitive market,
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no single buyer or seller can influence the price of a product
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A firm's profit maximizing rule:
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if marginal revenue is greater than marginal cost, the firm should increase its output
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Firms operating in competitive markets produce output levels where marginal revenue equals
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price, average revenue, and total revenue divided by output
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When buyers in a competitive market take the selling price as given, they are said to be
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price takers
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When a firm in a competitive market produces 10 units of output, it has a marginal revenue of $8. What would be the firm's total revenue when it produces 6 units of output?
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$48
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As a general rule, when accountants calculate profit they account for explicit costs but usually ignore
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implicit costs
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Which of the following expressions is correct for a competitive firm?
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Profit = total revenue minus total cost
Marginal revenue = change in total revenue divided by change in quantity of output
Average revenue = total revenue divided by quantity of output
Marginal revenue = change in total revenue divided by change in quantity of output
Average revenue = total revenue divided by quantity of output
question
If a competitive firm is 1. selling 1000 units of its product at a price of $9 per unit and 2. earning a positive profit, then
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its total cost is less than $9000
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When a perfectly competitive firm makes a decision to shut down, it is most likely that
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price is below the minimum of average variable cost
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A firm's short-run supply curve is part of which curve?
answer
marginal cost
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For any given price, a firm in a competitive market will maximize profit by selecting the level of output at which price intersects the
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marginal cost curve
question
To begin, a competitive firm is selling its output for $20 per unit and it is maximizing its profit, which is positive. Now, the price rises to $25 and the firm makes whatever adjustments are necessary to maximize its profit at the now-higher price. Once the firm has adjusted, which of the following statements is correct?
answer
-the firm's quantity of output is higher than it was previously
-the firm's average total cost is higher than it was previously
-the firm's average revenue is higher than it was previously
-the firm's average total cost is higher than it was previously
-the firm's average revenue is higher than it was previously
question
The complete description of a competitive firm's supply curve is as follows: The competitive firm's short-run supply curve is that the portion of the
answer
marginal cost curve that lies above average variable cost
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When all firms and potential firms in a market have the same cost curves, the long-run equilibrium of a competitive market with free entry and exit will be characterized by firms
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operating at efficient scale
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When calculating economic profit, total costs include
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opportunity costs, fixed costs, and variable costs
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When firms are neither entering nor exiting a perfectly competitive market,
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-total cost must equal total revenue
-economic profits must be zero
-average revenue must equal average total cost
-economic profits must be zero
-average revenue must equal average total cost
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When firms in a perfectly competitive market face the same costs, in the long run they must be operating
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at their efficient scale
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The market for craft art used in home decoration is a very competitive market. In this market, costs vary since some people work faster than others and have more artistic talent in producing craft art. In this competitive market, we would expect to observe
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little exit and entry.
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A firm will shut down in the short run if
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revenue is not sufficient to cover its variable costs of production
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A firm in a competitive market will maximize profit when the level of production is such that
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marginal cost equals price
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