question
Economic profit is equal to
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Total revenue minus the sum of explicit and implicit costs
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____ consists of the action of individuals and groups that spend resources to influence public policy in the hope of redistributing (transferring) income to themselves from others
answer
Rent-seeking
question
A perfectly competitive firm that seeks to either maximize profit or minimize losses will produce the level of output at which
answer
MR = MC
question
The law of diminishing marginal returns occurs in the
answer
Short-run only
question
The concentration ratio provides a measure of the extent to which an industry
answer
Is dominated by a small number of firms
question
Consider the following information about a business Jackie's opened last year: price = $12, quantity sold = 150,000; implicit cost = $155,000; explicit cost = $660,000. What was Jackie's accounting profit last year?
answer
$1,140,000
(TR= 12*150,000 = $1,800,000 --- accounting profit = $1,800,000 - 660,000 = $1,140,000)
(TR= 12*150,000 = $1,800,000 --- accounting profit = $1,800,000 - 660,000 = $1,140,000)
question
For the perfectly price discriminating monopolist, price
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Equals marginal revenue
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The monopolistic competitive firm _____ exhibits resource allocative efficiency because ____.
answer
Does not, at its chosen quantity of output P = MC
question
The perfectly competitive firm's short-run supply curve is that portion of the firm's ___ curve that lies ____.
answer
Marginal cost, above its average variable cost curve
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In a perfectly competitive market, profit maximization ____ with resource allocative efficiency, which holds that ____.
answer
Is consitant, P = MC
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The marginal physical product (MPP) of a variable input is
answer
The change in total output that results from changing the variable input by one unit.
question
The perfectly competitive firm will continue to increase its production as long as marginal
answer
Revenue is greater than marginal cost
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Which of the following is the best example of a homogeneous product.
answer
Wheat
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According to the average-marginal rule, when average variable cost is falling
answer
Marginal cost must be below average variable cost, none of the above
question
For a monopolistic competitor, ____, and for a perfectly competitive firm ___.
answer
P > MR, P = MR
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For a single-price monopoly firm, price is _____ marginal revenue. For a perfectly price discriminating monopoly, price is ___ marginal revenue.
answer
Greater than, equal to
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The monopolistic competition firm ____ exhibit resource allocative efficiency because ___.
answer
Does not, at its chosen quantity of output P > MC
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The ___ curve cuts the ___ curve at its lowest point.
answer
MC, AVC
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An increasing-cost industry is characterized by ____ long-run supply curve
answer
An upward-sloping
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If economic profit is zero, then it follows that ___ is ___, assuming that there are no implicit costs.
answer
Accounting profit, zero
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The monopolistic competitor faces a ___ demand curve and the profit-maximizing monopolistic competitor charges a price that is ___ marginal cost.
answer
Downward-sloping, greater than
question
One difference between a perfectly competitive firm and a monopoly firm is that for a perfectly competitive firm the
answer
The demand curve and marginal curve are the same, but not for a monopoly firm
question
Consider the following information about a business Jackie opened last year: price = $12, quantity sold = 150,000; implicit cost = $155,000; explicit cost = $660,000. What was Jackie's economic profit last year?
answer
$985,000
(total revenue = $12*150,000 = $1,800,000 and economic profit = $1,800,000 - (155,000 + 660,000) = $985,000
(total revenue = $12*150,000 = $1,800,000 and economic profit = $1,800,000 - (155,000 + 660,000) = $985,000
question
The change in output that results from changing a variable input by one unit, holding all other inputs fixed, is called the ___ product.
answer
Marginal physical
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Which of the following is not a condition of long-run competitive equilibrium?
answer
Firms are producing a level of output at which price is greater than marginal cost
question
Which of the following is not a necessary condition for a marker to be contestable?
answer
There are no barriers to entry; exit from a market is costless; all firms in the industry, both existing and new entrants, face the same costs of production; firms exiting the market can easily dispose of their fixed assets by selling them elsewhere
question
"A monopolistic competitor in equilibrium will produce an output level that is less than the level that would minimize its average total costs." Which concept is represented by this statement?
answer
Excess capacity theorem
question
In a contestable market,
answer
Economic profits in the long run are small or zero
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