ECON 201 Final Camille Nelson Practice Exams

question

If a market is in equilibrium and it experiences both an increase in demand and a decrease in supply, what can be said of the new equilibrium?

answer

equilibrium price will definitely rise and equilibrium quantity cannot be predicted.

question

Marginal cost:

answer

equals both AVC and ATC at their minimums.

question

A competitive firm will maximize profits at that output at which:

answer

total revenue exceeds total cost by the greatest amount.

question

Who bears the greater tax incidence if E1 is greater than E2?

answer

the seller.

question

Suppose the market for sugar is in equilibrium at $3 per kilogram. this means:

answer

all remaining products will require more than $3 to produce sugar.

question

The law of diminishing returns indicates that:

answer

as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.

question

The effect of a Pigovian tax on a market is:

answer

increased price and reduced quantity to the efficient level.

question

If a perfectly completive firm shuts down in the short run:

answer

it will realize a loss equal to its total fixed costs.

question

The extra benefit associated with producing or consuming the next unit is called the:

answer

marginal benefit.

question

The fact that a perfectly competitive firm's total revenue curve is linear and upsloping to the right implies tat:

answer

product price is constant at all levels of output.

question

In order to help families with young children, the govt sets a price ceiling below the market equilibrium price. The mot likely outcome of this policy is:

answer

that it definitely will reduce producer surplus.

question

Characteristics of monopolistic competition:

answer

-relatively large number of sellers
-relatively easy entry to the industry
-product differentiation

question

-The demand curve in a perfectly competitive industry is ___________, while the demand curve to a single firm in that industry is __________.

answer

downsloping; perfectly elastic.

question

A firm finds that at its MR=MC output, its TC= $1000, TVC+ $800, TFC= $200, and total revenue is $900. This firm should:

answer

produce because the resulting loss is less than its TFC.

question

An optimal corrective tax levied on polluters will:

answer

be equal to the marginal cost of their actions imposed on third parties.

question

An external cost of an activity is one that is:

answer

borne by those not directly involved.

question

In the long-run, the price charged by a monopolistically competitive firm seeking to maximize profit will:

answer

exceed MC, but equal ATC.

question

WhWhwat is the definition of economic profit?

answer

accounting profit - implicit costs.

question

An increase in the price of oil also makes it more expensive expensive to run a ride-on mower. If the price of oil increases, the demand for ride-on mowers will ____and the supply will _______.

answer

decrease; decrease.

question

The monopolistically competitive seller's demand curve will become more elastic the:

answer

larger the number of competitors.

question

The price of pizza falls relative to the price of spaghetti, and so people buy more pizza instead of spaghetti. This is an example of responding to:

answer

incentives.

question

In the short run the individual competitive firm's supply curve is that segment of the:

answer

marginal cost curve lying above the average variable cost curve.

question

If society were to experience an increase in its available resources:

answer

its production possibilities frontier would shift out.

question

The short-run supply curve for a perfectly competitive industry can be found by:

answer

summing horizontally the segments of the MC curves lying above the AVC curve for all firms.

question

Shot-run equilibrium is entailing economic loss is shown by:

answer

ATC levitating above the demand curve.

question

IN sequential games, an especially important part of strategic behavior is to:

answer

"think forward, work backward."

question

A competitive firm in the short run can determine the profit-maximina (or loss minimizing) output by equating:

answer

marginal revenue and marginal cost.

question

What is an example of a short-run adjustment?

answer

The local bakery hires two additional bakers.

question

what is marginal cost?

answer

The price or cost of an extra variable input divided by its marginal product.

question

Average fixed costs:

answer

declines continually as output increases.

question

The likely outcome of this action will be that the country's citizen's will be:

answer

forced to consume less than before if they possessed a comparative advantage in the production of a good.

question

When total product is increasing at a decreasing rate, marginal product it:

answer

positive and decreasing.

question

An industry comprised of 40 firms, none of which has more than 3 percent of the total market for a differentiated product is an example of:

answer

monopolistic competition.

question

The govt imposing a minimum wage is an example of an attempt to:

answer

redistribute surplus in a market.

question

If a perfectly competitive firm is producing at the MR = MC output level and earning an economic profit, then:

answer

new firms will enter this market.

question

What does a long run supply curve for a perfectly competitive increasing cost industry look like?

answer

upsloping.

question

The relationship between the marginal cost and the average total cost schedule is such that:

answer

if MC is dealing, ATC must also be declining.

question

A rare coin dealer is likely to have a less elastic price elasticity of supply than a coffee shop due to _____________.

answer

the availability of inputs.

question

The practice of charging customers different prices for the same good is called:

answer

price discrimination.

question

What is the root cause of excess in a monopolistically competitive industry?

answer

product differentiation.

question

According to class lecture, the dynamic view of monopoly is best described by which of the following?

answer

Positive economic profits may contribute to future consumer surplus.

question

What is an example of a long run production adjustment?

answer

Wan-Mart builds another Supercenter.

question

Which of the following is an implicit cost of production?

answer

rent that could have been earned on a building owned and used by the firm.

question

If four workers can produce 27 chairs a day and five can produce 32 chairs a day, the marginal product of the fifth worker is _____.

answer

5 chairs.

question

The law of diminishing marginal returns:

answer

explains why the average total cost curves are U-shaped in the short-run.

question

In the short-run, if marginal product is at its maximum, then:

answer

marginal cost is at its maximum.

question

Marginal Cost is the:

answer

additional cost of producing an additional unit of output.

question

Average variable cost can be calculated by:

answer

: (TC-FC)/Q
: (TC/Q) - AFC
: TVC / Q

question

Curve G approaches curve F because...

answer

average fixed cost falls a output rises.

question

If the marginal cost curve is below the average variable cost curve, then:

answer

average variable cost is decreasing.

question

If, when a firm doubles all its inputs, its average cost of production increases, then production displays:

answer

diseconomies of scale.

question

When a firm's long-run average cost curve is horizontal for a range of output, then that range of production displays:

answer

constant return scale.

question

A very large number of small sellers who sell identical products imply:

answer

the inability of one seller to influence price.

question

In perfect competition:

answer

the market demand curve is downward sloping while demand for an individual seller's product is perfectly elastic.

question

If the market price is $25, the average revenue of selling 5 units is:

answer

(25x5) = 125
125/5= $25.

question

What is the fixed cost of production?

answer

the total cost at quantity zero.

question

if the firm is producing 700 units, (triangle past MC curve),

answer

it should cut back its output to maximize profit.

question

If, for the last unit of a good produced by a perfectly competitive firm, MR > MC, then in producing it, the firm:

answer

added more to total revenue the it added to total costs.

question

If, for a given output level, a perfectly competitive firm's price is less than its average variable cost, the firm:

answer

should shut down.

question

In the long-run average cost curve is U-shaped, the optimal scale of production from society's view point is:

answer

the minimum efficient scale.

question

which of the following characteristics is not common both monopolistic competition and perfect competition?

answer

firms take market prices as given.

question

IF the demand curve for a firm is downward-sloping, its marginal revenue curve:

answer

will lie below the demand curve.

question

What are common characteristics for both monopolistic competition and perfect competition?

answer

firms take market prices as given.

question

In the long run, if price is less than average cost,__

answer

there is an incentive for firms to exit the market.

question

a dominant strategy:

answer

is one that is the best for a firm, no matter what strategies others firm use.

question

Producing a homogeneous product occurs in which of the following industries?

answer

perfect competition only.

1 of 66

question

If a market is in equilibrium and it experiences both an increase in demand and a decrease in supply, what can be said of the new equilibrium?

answer

equilibrium price will definitely rise and equilibrium quantity cannot be predicted.

question

Marginal cost:

answer

equals both AVC and ATC at their minimums.

question

A competitive firm will maximize profits at that output at which:

answer

total revenue exceeds total cost by the greatest amount.

question

Who bears the greater tax incidence if E1 is greater than E2?

answer

the seller.

question

Suppose the market for sugar is in equilibrium at $3 per kilogram. this means:

answer

all remaining products will require more than $3 to produce sugar.

question

The law of diminishing returns indicates that:

answer

as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point.

question

The effect of a Pigovian tax on a market is:

answer

increased price and reduced quantity to the efficient level.

question

If a perfectly completive firm shuts down in the short run:

answer

it will realize a loss equal to its total fixed costs.

question

The extra benefit associated with producing or consuming the next unit is called the:

answer

marginal benefit.

question

The fact that a perfectly competitive firm's total revenue curve is linear and upsloping to the right implies tat:

answer

product price is constant at all levels of output.

question

In order to help families with young children, the govt sets a price ceiling below the market equilibrium price. The mot likely outcome of this policy is:

answer

that it definitely will reduce producer surplus.

question

Characteristics of monopolistic competition:

answer

-relatively large number of sellers
-relatively easy entry to the industry
-product differentiation

question

-The demand curve in a perfectly competitive industry is ___________, while the demand curve to a single firm in that industry is __________.

answer

downsloping; perfectly elastic.

question

A firm finds that at its MR=MC output, its TC= $1000, TVC+ $800, TFC= $200, and total revenue is $900. This firm should:

answer

produce because the resulting loss is less than its TFC.

question

An optimal corrective tax levied on polluters will:

answer

be equal to the marginal cost of their actions imposed on third parties.

question

An external cost of an activity is one that is:

answer

borne by those not directly involved.

question

In the long-run, the price charged by a monopolistically competitive firm seeking to maximize profit will:

answer

exceed MC, but equal ATC.

question

WhWhwat is the definition of economic profit?

answer

accounting profit - implicit costs.

question

An increase in the price of oil also makes it more expensive expensive to run a ride-on mower. If the price of oil increases, the demand for ride-on mowers will ____and the supply will _______.

answer

decrease; decrease.

question

The monopolistically competitive seller's demand curve will become more elastic the:

answer

larger the number of competitors.

question

The price of pizza falls relative to the price of spaghetti, and so people buy more pizza instead of spaghetti. This is an example of responding to:

answer

incentives.

question

In the short run the individual competitive firm's supply curve is that segment of the:

answer

marginal cost curve lying above the average variable cost curve.

question

If society were to experience an increase in its available resources:

answer

its production possibilities frontier would shift out.

question

The short-run supply curve for a perfectly competitive industry can be found by:

answer

summing horizontally the segments of the MC curves lying above the AVC curve for all firms.

question

Shot-run equilibrium is entailing economic loss is shown by:

answer

ATC levitating above the demand curve.

question

IN sequential games, an especially important part of strategic behavior is to:

answer

"think forward, work backward."

question

A competitive firm in the short run can determine the profit-maximina (or loss minimizing) output by equating:

answer

marginal revenue and marginal cost.

question

What is an example of a short-run adjustment?

answer

The local bakery hires two additional bakers.

question

what is marginal cost?

answer

The price or cost of an extra variable input divided by its marginal product.

question

Average fixed costs:

answer

declines continually as output increases.

question

The likely outcome of this action will be that the country's citizen's will be:

answer

forced to consume less than before if they possessed a comparative advantage in the production of a good.

question

When total product is increasing at a decreasing rate, marginal product it:

answer

positive and decreasing.

question

An industry comprised of 40 firms, none of which has more than 3 percent of the total market for a differentiated product is an example of:

answer

monopolistic competition.

question

The govt imposing a minimum wage is an example of an attempt to:

answer

redistribute surplus in a market.

question

If a perfectly competitive firm is producing at the MR = MC output level and earning an economic profit, then:

answer

new firms will enter this market.

question

What does a long run supply curve for a perfectly competitive increasing cost industry look like?

answer

upsloping.

question

The relationship between the marginal cost and the average total cost schedule is such that:

answer

if MC is dealing, ATC must also be declining.

question

A rare coin dealer is likely to have a less elastic price elasticity of supply than a coffee shop due to _____________.

answer

the availability of inputs.

question

The practice of charging customers different prices for the same good is called:

answer

price discrimination.

question

What is the root cause of excess in a monopolistically competitive industry?

answer

product differentiation.

question

According to class lecture, the dynamic view of monopoly is best described by which of the following?

answer

Positive economic profits may contribute to future consumer surplus.

question

What is an example of a long run production adjustment?

answer

Wan-Mart builds another Supercenter.

question

Which of the following is an implicit cost of production?

answer

rent that could have been earned on a building owned and used by the firm.

question

If four workers can produce 27 chairs a day and five can produce 32 chairs a day, the marginal product of the fifth worker is _____.

answer

5 chairs.

question

The law of diminishing marginal returns:

answer

explains why the average total cost curves are U-shaped in the short-run.

question

In the short-run, if marginal product is at its maximum, then:

answer

marginal cost is at its maximum.

question

Marginal Cost is the:

answer

additional cost of producing an additional unit of output.

question

Average variable cost can be calculated by:

answer

: (TC-FC)/Q
: (TC/Q) - AFC
: TVC / Q

question

Curve G approaches curve F because...

answer

average fixed cost falls a output rises.

question

If the marginal cost curve is below the average variable cost curve, then:

answer

average variable cost is decreasing.

question

If, when a firm doubles all its inputs, its average cost of production increases, then production displays:

answer

diseconomies of scale.

question

When a firm's long-run average cost curve is horizontal for a range of output, then that range of production displays:

answer

constant return scale.

question

A very large number of small sellers who sell identical products imply:

answer

the inability of one seller to influence price.

question

In perfect competition:

answer

the market demand curve is downward sloping while demand for an individual seller's product is perfectly elastic.

question

If the market price is $25, the average revenue of selling 5 units is:

answer

(25x5) = 125
125/5= $25.

question

What is the fixed cost of production?

answer

the total cost at quantity zero.

question

if the firm is producing 700 units, (triangle past MC curve),

answer

it should cut back its output to maximize profit.

question

If, for the last unit of a good produced by a perfectly competitive firm, MR > MC, then in producing it, the firm:

answer

added more to total revenue the it added to total costs.

question

If, for a given output level, a perfectly competitive firm's price is less than its average variable cost, the firm:

answer

should shut down.

question

In the long-run average cost curve is U-shaped, the optimal scale of production from society's view point is:

answer

the minimum efficient scale.

question

which of the following characteristics is not common both monopolistic competition and perfect competition?

answer

firms take market prices as given.

question

IF the demand curve for a firm is downward-sloping, its marginal revenue curve:

answer

will lie below the demand curve.

question

What are common characteristics for both monopolistic competition and perfect competition?

answer

firms take market prices as given.

question

In the long run, if price is less than average cost,__

answer

there is an incentive for firms to exit the market.

question

a dominant strategy:

answer

is one that is the best for a firm, no matter what strategies others firm use.

question

Producing a homogeneous product occurs in which of the following industries?

answer

perfect competition only.

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