question
The characteristics that describe a perfectly competitive industry
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many firms selling an identical product
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A market with a large number of sellers
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might be a monopolistically competitive or a perfectly competitive market.
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Which of the following market types has the fewest number of firms?
answer
monopoly
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A market is classified as an oligopoly when
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a few firms compete
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If a perfectly competitive firm finds that the price exceeds its ATC, then the firm
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is making an economic profit.
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A perfectly competitive firm is producing 50 units of output, which it sells at the market price of $23 per unit. The firm's average total cost is $20. What is the firms total revenue?
answer
$1,150 (50x23)
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A perfectly competitive firm is producing 50 units of output, which it sells at the market price of $23 per unit. The firm's average total cost is $20. What is the firm's economic profit?
answer
$150 (1,150-(50x20))
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A good produced by a monopoly
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has no close substitutes
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A natural monopoly exists when
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one firm can supply an entire market at a lower average total cost than can two or more firms.
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To encourage invention and innovation, the government provides
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patents
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Which of the following is ALWAYS true when a single-price monopolist maximizes its profit?
answer
MR = MC
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The primary goal of a business firm is to
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maximize profit
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Lauren runs a chili restaurant in San Francisco. Her total revenue last year equaled $111,000. The rent on her restaurant totaled $48,000. Her labor costs totaled $43,000. Her materials, food and other variable costs totaled $19,000. To Lauren's accountant, Lauren earned a profit of?
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Earned a profit of $1,000
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If 9 workers can produce 1,550 units of output and 10 workers can produce 1,700 units of output, then the marginal product of the 10th worker is
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150 units
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Which of the following statements is correct?
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A consumer's budget line shows the limits to what a consumer can buy.
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Which of the following statements is correct?
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The slope of the budget line shows the opportunity cost of the good measured along the x-axis.
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If Fatma has $30 to spend on apples and bananas, where on the apple axis would Fatma's budget line intersect if the price of apples is $3 a pound?
answer
10 pounds
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An indifference curve shows
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different combinations of two goods among which the consumer is indifferent.
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As a consumer moves away from the origin onto higher indifference curves, what happens?
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The consumer reaches more preferred combinations of goods.
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The marginal rate of substitution is equal to the magnitude of the
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slope of the indifference curve.
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Normally shaped indifference curves are bowed towards the origin of the graph. The reason for this shape is
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diminishing marginal rate of substitution.
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When the indifference curve is steep, the consumer has a
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high marginal rate of substitution for the good on the horizontal axis.
question
In an indifference curve/budget line diagram, at the consumer equilibrium the slope of the budget line
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equals the slope of the indifference curve.
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