Econ 103-Exam 3 - Assignment Essays

question

Total revenue minus total (opportunity) cost

answer

economic profit

question

The cost of all the inputs a firm uses in production (both implicit and explicit)

answer

total (opportunity) cost

question

The amount a firm receives for the sale of its output

answer

total revenue

question

Costs that do not involve a monetary outlay by the firm

answer

implicit cost

question

Total revenue minus explicit costs

answer

accounting profit

question

Costs that involve a direct monetary outlay by the firm

answer

explicit cost

question

Costs that do not vary with the quantity of output produced

answer

fixed cost

question

The increase in output that arises from an additional unit of labor used

answer

marginal product of labor

question

The increase in total cost that arises when another unit of output is produced

answer

marginal cost

question

Costs that vary with the quantity of output produced

answer

variable cost

question

The property whereby the marginal product declines as the quantity of the labor used increases

answer

diminishing marginal product of labor

question

Change in total cost/change in quantity

answer

marginal cost

question

Marginal cost and marginal product of labor change in _____________ directions

answer

opposite

question

Price X Quantity

answer

total revenue

question

Total revenue minus total opportunity cost

answer

economic profit

question

The cost of all the inputs a firm uses in production (both implicit and explicit)

answer

total opportunity cost

question

The amount a firm receives for the sale of its output

answer

total revenue

question

Costs that represent a foregone opportunity to the firm

answer

implicit cost

question

Total revenue minus explicit cost

answer

accounting profit

question

Costs that involve a direct monetary outlay by the firm

answer

explicit cost

question

True or false?
Total revenue equals the quantity of output the firm produces times the price at which it sells its output

answer

true

question

True or false?
If total revenue is $100, explicit costs are $50, and implicit costs are $30, then accounting profit equals $50

answer

true

question

True or false?
If total revenue is $200, explicit costs are $100, and implicit costs are $50, then economic profit equals $50

answer

true

question

A monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms

answer

natural monopoly

question

A firm that is the sole seller of a product without close substitutions

answer

monopoly

question

The business practice of selling the same good at different prices to different customers

answer

price discrimination

question

A situation in the short run where a company can hire more workers, but the workers will eventually become useless without expanding the company

answer

kapital constrained

question

-many sellers
-identical product
-free entry or exit

answer

characteristics of a perfectly competitive industry setting

question

Perfect competition leads to _____ _____________ __________

answer

zero economic profit

question

-be your own boss
-interest payment will eventually go down
-could end up making profit
-make relationships with suppliers and get decreased prices to produce more output
-specific product could be needed in future

answer

reasons why to continue when you are worse off

question

-stockholders
-gold
-silver
-oil
-corn
-wheat

answer

perfect competition

question

-water company
-electric company
-prescription drug makers (patents)

answer

monopoly

question

-price taker
-zero economic profit
-many producers of an identical product
-free entry and exit

answer

perfect competition

question

-one seller of a unique product
-barriers to entry
-price maker
-positive economic profit

answer

monopoly

question

-add workers to fixed capital
-quantity increase
-costs increase
-marginal product of labor decrease
-marginal costs increase

answer

production and costs in the short run (kapital constrained)

question

-expansion
-economies of scale
-diseconomies of scale
-constant

answer

production and costs in the long run

question

-short run
-quit producing
-send workers home
-profit opposite of fixed costs
-best choice doesn't generate enough to pay workers

answer

shut down

question

Maximize profits

answer

economic goal

question

P x Q
-the amount a firm receives for the sale of its outputs

answer

question

TR-TC

answer

profit

question

The market value of the inputs a firm uses in production

answer

question

Opportunity costs of making its output of goods and services

answer

costs of production

question

Money after the bills are paid

answer

accounting profit (bills=explicit cost)

question

TR after explicit (bills) and implicit (opportunity costs) are paid

answer

economic profit

question

TR>implicit and explicit costs

answer

economic profit

question

forgone things fall into ___________ ____________

answer

implicit costs

question

Firms are almost always in the _________ ___________

answer

short run

question

In the ________ ______, at least one factor of production (input) is fixed

answer

short run

question

-fixed costs
-variable costs
-kapital constrained

answer

short run

question

In the ______ _____, all factors of production (input) are variable

answer

long run

question

-all variable costs
-increase entire scale of production

answer

long run

question

FC + VC

answer

question

Kapital intensive?
hot dog vendor

answer

question

Kapital intensive?
General Motors

answer

yes

question

Change in total production/change in labor

answer

marginal product of labor

question

Shows the relationship between quantity of inputs used to make a good and the quantity of output of that good

answer

production function

question

Increase in output that arises from an additional unit of that input

answer

marginal product of any input in the production process

question

Marginal product of an input declines as the quantity of the input increases

answer

diminishing marginal product

question

Shows the relationship between the amount of output produced by the firm and the cost associated with this production

answer

total cost curve

question

Long run average total cost falls as the quantity of output increases

answer

economies of scale

question

Situation in which inputs are doubled and output is more than doubled

answer

economies of scale

question

Long run average total cost rises as the quantity of output increases

answer

diseconomies of scale

question

Situation in which inputs are doubled and output is less than doubled

answer

diseconomies of scale

question

Long run average total cost stays he same as the quantity of output increases

answer

constant returns to scale

question

Situation in which inputs are doubled and output is exactly doubled

answer

constant returns to scale

question

If an industry exhibits economies of scale over a large range then we would expect that market to be served by one or at most a few __________ ________

answer

large firms

question

If an industry exhibits diseconomies of scale early on then we would expect that market to be served by many _______ ___________ ______

answer

small competing firms

question

-many buyers and sellers
-good offered by various sellers are the same
-firms can freely enter or exit the market
-perfect information or resource mobility
-the actions of any single buyer or seller have a negligible impact on the market price
-each buyer and seller takes the market price as given
-zero economic profit

answer

Perfectly competitive market

question

If marginal revenue (MR) - marginal cost (MC) is ______ then continue producing

answer

positive

question

MR>MC

answer

increase Q

question

MR<MC

answer

decrease Q

question

MR=MC

answer

profit is maximized

question

Change in total revenue/change in quantity

answer

marginal revenue

question

Change in total cost/change in quantity

answer

marginal cost

question

When total revenue is steeper than total cost, they should _______

answer

produce

question

A firm should produce a unit when it makes them _______ _____

answer

better off

question

Why can profit maximization be a long run equilibrium?

answer

zero economic profit is the only profit when there is perfect competition, if there is profit, it will attract other sellers who will enter the market and drive the price down

question

A short run decision not to produce

answer

shut down

question

A long run decision to leave the market

answer

exit

question

In the long run, firms will enter the market until profit is driven to _____

answer

zero

question

-ownership of a key resource
-the government gives a single firm the exclusive right to produce some good
-costs of production make a single producer more efficient than a large number of producers

answer

barriers to entry (monopolies arise)

question

-sole seller of a product
-the product does not have close substitutes
-no competition

answer

monopoly

question

-diamond companies
-oil companies

answer

examples of ownership of a key resource barrier to entry

question

Two important examples of how government creates a monopoly to serve the public interest are _____ and ______

answer

patent and copyright laws

question

When there are economies of scale over a large range of output

answer

natural monopoly

question

A monopolist _______ Q and _____ ___ P

answer

restricts, marks up

question

A ________ places a wedge between the consumer's willingness to pay (D) and the producer's cost of production (MC)

answer

monopoly

question

-units are not produced and consumed that could benefit society
-high P, low Q

answer

monopoly inefficient to society, desirable to the firm

question

-new innovative products
-restricted output, higher prices
-government subsidy=higher taxes
-patents=higher prices

answer

monopoly good or bad?

question

The business practice of selling the same good at different prices to different customers, even though the costs for producing for the two customers are the same

answer

price discrimination

question

-movie tickets
-airline tickets
-coupons
-volume discounts

answer

examples of price discrimination

1 of 91

question

Total revenue minus total (opportunity) cost

answer

economic profit

question

The cost of all the inputs a firm uses in production (both implicit and explicit)

answer

total (opportunity) cost

question

The amount a firm receives for the sale of its output

answer

total revenue

question

Costs that do not involve a monetary outlay by the firm

answer

implicit cost

question

Total revenue minus explicit costs

answer

accounting profit

question

Costs that involve a direct monetary outlay by the firm

answer

explicit cost

question

Costs that do not vary with the quantity of output produced

answer

fixed cost

question

The increase in output that arises from an additional unit of labor used

answer

marginal product of labor

question

The increase in total cost that arises when another unit of output is produced

answer

marginal cost

question

Costs that vary with the quantity of output produced

answer

variable cost

question

The property whereby the marginal product declines as the quantity of the labor used increases

answer

diminishing marginal product of labor

question

Change in total cost/change in quantity

answer

marginal cost

question

Marginal cost and marginal product of labor change in _____________ directions

answer

opposite

question

Price X Quantity

answer

total revenue

question

Total revenue minus total opportunity cost

answer

economic profit

question

The cost of all the inputs a firm uses in production (both implicit and explicit)

answer

total opportunity cost

question

The amount a firm receives for the sale of its output

answer

total revenue

question

Costs that represent a foregone opportunity to the firm

answer

implicit cost

question

Total revenue minus explicit cost

answer

accounting profit

question

Costs that involve a direct monetary outlay by the firm

answer

explicit cost

question

True or false?
Total revenue equals the quantity of output the firm produces times the price at which it sells its output

answer

true

question

True or false?
If total revenue is $100, explicit costs are $50, and implicit costs are $30, then accounting profit equals $50

answer

true

question

True or false?
If total revenue is $200, explicit costs are $100, and implicit costs are $50, then economic profit equals $50

answer

true

question

A monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms

answer

natural monopoly

question

A firm that is the sole seller of a product without close substitutions

answer

monopoly

question

The business practice of selling the same good at different prices to different customers

answer

price discrimination

question

A situation in the short run where a company can hire more workers, but the workers will eventually become useless without expanding the company

answer

kapital constrained

question

-many sellers
-identical product
-free entry or exit

answer

characteristics of a perfectly competitive industry setting

question

Perfect competition leads to _____ _____________ __________

answer

zero economic profit

question

answer

reasons why to continue when you are worse off

question

-stockholders
-gold
-silver
-oil
-corn
-wheat

answer

perfect competition

question

-water company
-electric company
-prescription drug makers (patents)

answer

monopoly

question

-price taker
-zero economic profit
-many producers of an identical product
-free entry and exit

answer

perfect competition

question

-one seller of a unique product
-barriers to entry
-price maker
-positive economic profit

answer

monopoly

question

-add workers to fixed capital
-quantity increase
-costs increase
-marginal product of labor decrease
-marginal costs increase

answer

production and costs in the short run (kapital constrained)

question

-expansion
-economies of scale
-diseconomies of scale
-constant

answer

production and costs in the long run

question

-short run
-quit producing
-send workers home
-profit opposite of fixed costs
-best choice doesn't generate enough to pay workers

answer

shut down

question

Maximize profits

answer

economic goal

question

P x Q
-the amount a firm receives for the sale of its outputs

answer

question

TR-TC

answer

profit

question

The market value of the inputs a firm uses in production

answer

question

Opportunity costs of making its output of goods and services

answer

costs of production

question

Money after the bills are paid

answer

accounting profit (bills=explicit cost)

question

TR after explicit (bills) and implicit (opportunity costs) are paid

answer

economic profit

question

TR>implicit and explicit costs

answer

economic profit

question

forgone things fall into ___________ ____________

answer

implicit costs

question

Firms are almost always in the _________ ___________

answer

short run

question

In the ________ ______, at least one factor of production (input) is fixed

answer

short run

question

-fixed costs
-variable costs
-kapital constrained

answer

short run

question

In the ______ _____, all factors of production (input) are variable

answer

long run

question

-all variable costs
-increase entire scale of production

answer

long run

question

FC + VC

answer

question

Kapital intensive?
hot dog vendor

answer

question

Kapital intensive?
General Motors

answer

yes

question

Change in total production/change in labor

answer

marginal product of labor

question

Shows the relationship between quantity of inputs used to make a good and the quantity of output of that good

answer

production function

question

Increase in output that arises from an additional unit of that input

answer

marginal product of any input in the production process

question

Marginal product of an input declines as the quantity of the input increases

answer

diminishing marginal product

question

Shows the relationship between the amount of output produced by the firm and the cost associated with this production

answer

total cost curve

question

Long run average total cost falls as the quantity of output increases

answer

economies of scale

question

Situation in which inputs are doubled and output is more than doubled

answer

economies of scale

question

Long run average total cost rises as the quantity of output increases

answer

diseconomies of scale

question

Situation in which inputs are doubled and output is less than doubled

answer

diseconomies of scale

question

Long run average total cost stays he same as the quantity of output increases

answer

constant returns to scale

question

Situation in which inputs are doubled and output is exactly doubled

answer

constant returns to scale

question

If an industry exhibits economies of scale over a large range then we would expect that market to be served by one or at most a few __________ ________

answer

large firms

question

If an industry exhibits diseconomies of scale early on then we would expect that market to be served by many _______ ___________ ______

answer

small competing firms

question

answer

Perfectly competitive market

question

If marginal revenue (MR) - marginal cost (MC) is ______ then continue producing

answer

positive

question

MR>MC

answer

increase Q

question

MR<MC

answer

decrease Q

question

MR=MC

answer

profit is maximized

question

Change in total revenue/change in quantity

answer

marginal revenue

question

Change in total cost/change in quantity

answer

marginal cost

question

When total revenue is steeper than total cost, they should _______

answer

produce

question

A firm should produce a unit when it makes them _______ _____

answer

better off

question

Why can profit maximization be a long run equilibrium?

answer

zero economic profit is the only profit when there is perfect competition, if there is profit, it will attract other sellers who will enter the market and drive the price down

question

A short run decision not to produce

answer

shut down

question

A long run decision to leave the market

answer

exit

question

In the long run, firms will enter the market until profit is driven to _____

answer

zero

question

-ownership of a key resource
-the government gives a single firm the exclusive right to produce some good
-costs of production make a single producer more efficient than a large number of producers

answer

barriers to entry (monopolies arise)

question

-sole seller of a product
-the product does not have close substitutes
-no competition

answer

monopoly

question

-diamond companies
-oil companies

answer

examples of ownership of a key resource barrier to entry

question

Two important examples of how government creates a monopoly to serve the public interest are _____ and ______

answer

patent and copyright laws

question

When there are economies of scale over a large range of output

answer

natural monopoly

question

A monopolist _______ Q and _____ ___ P

answer

restricts, marks up

question

A ________ places a wedge between the consumer's willingness to pay (D) and the producer's cost of production (MC)

answer

monopoly

question

-units are not produced and consumed that could benefit society
-high P, low Q

answer

monopoly inefficient to society, desirable to the firm

question

-new innovative products
-restricted output, higher prices
-government subsidy=higher taxes
-patents=higher prices

answer

monopoly good or bad?

question

The business practice of selling the same good at different prices to different customers, even though the costs for producing for the two customers are the same

answer

price discrimination

question

-movie tickets
-airline tickets
-coupons
-volume discounts

answer

examples of price discrimination

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