ECON 102 Quiz Lesson 7 - Assignment Essays

Q: Refer to the above figure. The figure represents the market demand and supply curves for widgets. If this industry is perfectly competitive, what statement can be made about the demand curve for an individual firm's products?

An individual firm's demand curve will be horizontal at $5

Q: After some point successive equal increases in a variable factor of production, when added to a fixed amount of inputs, will result in smaller increases in output. This is known as:

the law of diminishing marginal product

Q: If there are no barriers to entry into an industry,:

long-run economic profits must be zero

Q: The opportunity cost of capital is:

the rate of return that could be earned by the owner's capital were it used elsewhere

question

Economic profits are equal to:

answer

total revenues minus the implicit and explicit costs of all inputs used

question

A perfectly competitive firm is selling 300 units of output at $4 each. At this output level, total fixed cost is $100 and total variable cost is $500. The firm:

answer

is earning a profit, but not necessarily the maximum profit

question

The typical shape of the long-run average cost curve is like:

answer

the letter "U"

question

When MR < MC for a firm, the firm should:

answer

reduce its level of output

question

Refer to the above figure. The figure represents the market demand and supply curves for widgets. If this industry is perfectly competitive, what statement can be made about the demand curve for an individual firm's products?

answer

An individual firm's demand curve will be horizontal at $5

question

Refer to the above figure. Average variable costs are represented by curve:

answer

question

Which of the following is correct?

answer

TC = TFC + TVC

question

Under the perfectly competitive market structure, the demand curve for an individual firm's products is:

answer

perfectly elastic

question

All of the following are most likely to be fixed costs EXCEPT the cost relating to:

answer

packaging

question

Which of the following is TRUE for a firm in the long run?

answer

All costs are variable costs

question

For a firm in a perfectly competitive industry, the demand curve for its own product is:

answer

horizontal

question

After some point successive equal increases in a variable factor of production, when added to a fixed amount of inputs, will result in smaller increases in output. This is known as:

answer

the law of diminishing marginal product

question

If there are no barriers to entry into an industry,:

answer

long-run economic profits must be zero

question

As successive equal increases in a variable factor of production are added to fixed factors of production, there will be a point beyond which the extra product that can be attributed to each additional unit of the variable factor of production will decline. This is known as the law of:

answer

diminishing marginal product

question

Figure 11-7 shows the cost structure for a firm.

Refer to Figure 11-7. When the output level is 100 units average fixed cost is:

answer

question

Total revenue divided by quantity is:

answer

average revenue

question

Under perfect competition, a firm that sets its price slightly above the market price would:

answer

lose all of its customers

question

In the above figure, the long-run cost curve between points A and B illustrates:

answer

economies of scale

question

The opportunity cost of capital is:

answer

the rate of return that could be earned by the owner's capital were it used elsewhere

question

Refer to the above table. At an output of 4 units, average variable costs are:

answer

$16

question

You rent a DVD of The Dark Knight Rises. The rental is for seven days and you watch the movie on the first day. You tell a friend about the film and your friend asks to come over and watch the movie with you before it is due back. What is your opportunity cost if you decide to watch the movie a second time instead of going to a football game?

answer

the football game you forego by watching the movie again

question

Refer to the above table. When output rises from 4 units to 5 units, marginal costs are:

answer

$31

question

The amount of calendar time associated with the long run:

answer

varies by industry

question

For a firm in a perfectly competitive industry:

answer

marginal revenue and product price are equal at every level of output

question

Refer to the above table. What are total fixed costs at an output of 2 units?

answer

$150

question

Steven lives in a big city where there is a shortage of parking. He has a parking spot in his driveway where he parks his car. Which of the following statements is most correct?

answer

The opportunity cost of using the parking spot is the price he could charge someone else for using the spot

question

If a firm is experiencing diseconomies of scale, then:

answer

the long-run average cost curve is rising as output expands

question

If economic profit is zero, a firm:

answer

earns exactly a normal rate of return

question

Refer to the above figure. Line C in Panel B does not represent:

answer

total revenue

question

Economic profit is always:

answer

less than accounting profit

question

Which is always true at a firm's profit-maximizing rate of production?

answer

Marginal Revenue = Marginal Cost

question

You are a student at a university. You pay $8,000 per year in tuition, $5,000 per year in living expenses, and $1,000 per year for books. Were you not in school, you could earn $15,000 per year and you would not live with your parents. What is your economic cost of a year in college?

answer

$24,000

question

Explicit costs are:

answer

actual expenditures that a firm must make

question

If the explicit costs to a firm to produce a unit of output are $6 and the firm sells 200,000 units of output for $9 per unit, the accounting profit received by the producer is:

answer

$600,000

question

Refer to the above table. What are total costs at an output of 2 units?

answer

$200

question

If a firm gets so large that management of employees and other resources becomes a costly problem, it will be experiencing:

answer

diseconomies of scale

question

Average fixed costs will:

answer

fall as output rises

question

Refer to the above table. What are total costs at an output of 3 units?

answer

$270

question

Marginal revenue equals:

answer

the change in total revenue from selling one more unit

question

When accounting profits are positive, economic profits:

answer

could be positive, negative or zero

question

Diseconomies of scale occur:

answer

only in the long run

question

Refer to the above table. What are total fixed costs at an output of 3 units?

answer

$150

question

If government regulations significantly increase the cost of operating within a particular market, one result is that:

answer

new firms are discouraged from entering the market

question

In 1985, Alice paid $20,000 for an option to purchase ten acres of land. By paying the $20,000, she bought the right to buy the land for $100,000 in 1992. When she acquired the option in 1985, the land was worth $120,000. In 1992, it is worth $110,000. Should Alice exercise the option and pay $100,000 for the land?

answer

Yes

1 of 44

question

Economic profits are equal to:

answer

total revenues minus the implicit and explicit costs of all inputs used

question

A perfectly competitive firm is selling 300 units of output at $4 each. At this output level, total fixed cost is $100 and total variable cost is $500. The firm:

answer

is earning a profit, but not necessarily the maximum profit

question

The typical shape of the long-run average cost curve is like:

answer

the letter "U"

question

When MR < MC for a firm, the firm should:

answer

reduce its level of output

question

answer

An individual firm's demand curve will be horizontal at $5

question

Refer to the above figure. Average variable costs are represented by curve:

answer

question

Which of the following is correct?

answer

TC = TFC + TVC

question

Under the perfectly competitive market structure, the demand curve for an individual firm's products is:

answer

perfectly elastic

question

All of the following are most likely to be fixed costs EXCEPT the cost relating to:

answer

packaging

question

Which of the following is TRUE for a firm in the long run?

answer

All costs are variable costs

question

For a firm in a perfectly competitive industry, the demand curve for its own product is:

answer

horizontal

question

After some point successive equal increases in a variable factor of production, when added to a fixed amount of inputs, will result in smaller increases in output. This is known as:

answer

the law of diminishing marginal product

question

If there are no barriers to entry into an industry,:

answer

long-run economic profits must be zero

question

answer

diminishing marginal product

question

Figure 11-7 shows the cost structure for a firm.

Refer to Figure 11-7. When the output level is 100 units average fixed cost is:

answer

question

Total revenue divided by quantity is:

answer

average revenue

question

Under perfect competition, a firm that sets its price slightly above the market price would:

answer

lose all of its customers

question

In the above figure, the long-run cost curve between points A and B illustrates:

answer

economies of scale

question

The opportunity cost of capital is:

answer

the rate of return that could be earned by the owner's capital were it used elsewhere

question

Refer to the above table. At an output of 4 units, average variable costs are:

answer

$16

question

answer

the football game you forego by watching the movie again

question

Refer to the above table. When output rises from 4 units to 5 units, marginal costs are:

answer

$31

question

The amount of calendar time associated with the long run:

answer

varies by industry

question

For a firm in a perfectly competitive industry:

answer

marginal revenue and product price are equal at every level of output

question

Refer to the above table. What are total fixed costs at an output of 2 units?

answer

$150

question

Steven lives in a big city where there is a shortage of parking. He has a parking spot in his driveway where he parks his car. Which of the following statements is most correct?

answer

The opportunity cost of using the parking spot is the price he could charge someone else for using the spot

question

If a firm is experiencing diseconomies of scale, then:

answer

the long-run average cost curve is rising as output expands

question

If economic profit is zero, a firm:

answer

earns exactly a normal rate of return

question

Refer to the above figure. Line C in Panel B does not represent:

answer

total revenue

question

Economic profit is always:

answer

less than accounting profit

question

Which is always true at a firm's profit-maximizing rate of production?

answer

Marginal Revenue = Marginal Cost

question

answer

$24,000

question

Explicit costs are:

answer

actual expenditures that a firm must make

question

If the explicit costs to a firm to produce a unit of output are $6 and the firm sells 200,000 units of output for $9 per unit, the accounting profit received by the producer is:

answer

$600,000

question

Refer to the above table. What are total costs at an output of 2 units?

answer

$200

question

If a firm gets so large that management of employees and other resources becomes a costly problem, it will be experiencing:

answer

diseconomies of scale

question

Average fixed costs will:

answer

fall as output rises

question

Refer to the above table. What are total costs at an output of 3 units?

answer

$270

question

Marginal revenue equals:

answer

the change in total revenue from selling one more unit

question

When accounting profits are positive, economic profits:

answer

could be positive, negative or zero

question

Diseconomies of scale occur:

answer

only in the long run

question

Refer to the above table. What are total fixed costs at an output of 3 units?

answer

$150

question

If government regulations significantly increase the cost of operating within a particular market, one result is that:

answer

new firms are discouraged from entering the market

question

answer

Yes

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