ECON 202 - exam 2 - Assignment Essays

question

If total utility increases by smaller and smaller amounts as more units of a good are consumed, then marginal utility is

answer

positive and decreasing

question

If the ratio of the marginal utility of good A to the price of good A is less than the ratio of the marginal utility of good B to the price of good B then

answer

the consumer will consume more of good B to maximize utility.

question

The change in total utility due to a one unit change in the quantity consumed is

answer

marginal utility

question

Utility maximization subject to a budget constraint is achieved when

answer

the marginal utility per dollar for all goods consumed is equal.

question

Total utility may be determined by

answer

summing the marginal utility of each unit consumed

question

As a general rule, marginal utility will be less

answer

as more of the good is consumed.

question

The law of diminishing marginal returns

answer

suggests that as extra units of a variable resource are added to a constant amount of fixed resources the increments in output will decline beyond some point.

question

The long run is

answer

the period of time in which all resources are variable.

question

Use the following information:

Output/t - Average Variable Cost - Average Total Cost
1 $20.00 $26.00
2 $13.00 $16.00
3 $12.00 $14.00
4 $10.00 $11.50

The variable cost of producing the third unit is

answer

$36.00

question

Use the following information:

Output/t - Average Variable Cost - Average Total Cost
1 $20.00 $26.00
2 $13.00 $16.00
3 $12.00 $14.00
4 $10.00 $11.50

The marginal cost of increasing production from 3 units to 4 units is

answer

question

The average variable cost curve is U‑shaped because of

answer

increasing and decreasing marginal returns.

question

If long run average costs are falling then a firm is experiencing

answer

economies of scale.

question

Variable cost

answer

equals total cost less fixed cost.

question

Total cost for a typical firm

answer

always increases as output rises.

question

At 100 units of output, total cost is $10,000 and variable cost is $6,000. What does average fixed cost equal at 100 units?

answer

$40

question

When a long run average cost curve has a horizontal portion at the bottom we expect to observe

answer

many different size firms in the industry.

question

If economic profit is positive then accounting profit must

answer

also be positive.

question

Assume that in the short run a firm is producing 500 units of output at an average total cost of $3 per unit. If the marginal cost of producing one additional unit is $5 then the total cost of producing 501 units is

answer

$1505

question

A perfectly competitive firm's marginal cost curve is

answer

also its short-run supply curve above the minimum point of the average variable cost curve.

question

Assume a perfectly competitive increasing cost industry is in long run equilibrium. Now assume an increase in demand occurs. After all resulting adjustments have been completed

answer

both the new equilibrium price and industrial output will be greater than before.

question

In long run equilibrium in a perfectly competitive industry, the price of the product must be equal to

answer

the marginal cost of producing the product.

question

In an increasing cost industry

answer

the average total cost curve and the marginal cost curve shift down as firms leave the industry.

question

Assume that the development of a new type of electronic circuit lowers the cost of production in the personal computer market and that this market is perfectly competitive. The short run effect of this development will probably be

answer

a lower price and greater output.

question

Individual firms in a perfectly competitive market

answer

can sell all they produce at the market price.

question

The firm's demand curve in a perfectly competitive industry

answer

has a price elasticity of demand equal to minus infinity.

question

One of the major assumptions in perfect competition is

answer

freedom of entry and exit.

question

A perfectly competitive firm sells its output for $80 per unit. At 10,000 units of output, marginal cost is $80 and rising, average variable cost is $85, and average total cost is $100. In this situation the firm

answer

should shut down.

question

For a perfectly competitive firm, short‑run economic losses are eliminated in the long
run by

answer

firms leaving the industry, which causes higher prices

question

Positive economic profit indicates

answer

a firm is doing better than it could in its best alternative.

question

If firms in a perfectly competitive industry are suffering economic losses in the short run, then in the long run

answer

both a and c above occur.

question

Monopoly is defined as a market structure in which there is

answer

a single seller of a product which has no close substitutes

question

A monopolist

answer

is constrained by the market demand curve in setting price

question

A profit‑maximizing monopolist produces an output level where

answer

marginal revenue equals marginal cost

question

Barriers to entry

answer

may allow monopolies to earn positive economic profit in the long run

question

Suppose that a price‑discriminating monopolist divides its market into two segments. The firm will charge the lower price in the market segment where consumers

answer

have relatively more price elastic demand

question

Which of the following would not be considered price discrimination?

answer

charging more for BMWs than for Chevrolets

question

A monopolist's short run supply curve is

answer

nonexistent.

question

A major whiskey manufacturer failed in its attempt to engage in price discrimination between students and all other consumers. What is a possible explanation for this failure?

answer

There was nothing to prevent the students from reselling the whiskey to other consumers.

question

In the short run, a monopolist will always shut down when

answer

variable cost is greater than total revenue at all output levels

question

The demand curve any monopolist uses in making output decision is

answer

the same as the market demand curve

1 of 40

question

If total utility increases by smaller and smaller amounts as more units of a good are consumed, then marginal utility is

answer

positive and decreasing

question

If the ratio of the marginal utility of good A to the price of good A is less than the ratio of the marginal utility of good B to the price of good B then

answer

the consumer will consume more of good B to maximize utility.

question

The change in total utility due to a one unit change in the quantity consumed is

answer

marginal utility

question

Utility maximization subject to a budget constraint is achieved when

answer

the marginal utility per dollar for all goods consumed is equal.

question

Total utility may be determined by

answer

summing the marginal utility of each unit consumed

question

As a general rule, marginal utility will be less

answer

as more of the good is consumed.

question

The law of diminishing marginal returns

answer

suggests that as extra units of a variable resource are added to a constant amount of fixed resources the increments in output will decline beyond some point.

question

The long run is

answer

the period of time in which all resources are variable.

question

Use the following information:

Output/t - Average Variable Cost - Average Total Cost
1 $20.00 $26.00
2 $13.00 $16.00
3 $12.00 $14.00
4 $10.00 $11.50

The variable cost of producing the third unit is

answer

$36.00

question

answer

question

The average variable cost curve is U‑shaped because of

answer

increasing and decreasing marginal returns.

question

If long run average costs are falling then a firm is experiencing

answer

economies of scale.

question

Variable cost

answer

equals total cost less fixed cost.

question

Total cost for a typical firm

answer

always increases as output rises.

question

At 100 units of output, total cost is $10,000 and variable cost is $6,000. What does average fixed cost equal at 100 units?

answer

$40

question

When a long run average cost curve has a horizontal portion at the bottom we expect to observe

answer

many different size firms in the industry.

question

If economic profit is positive then accounting profit must

answer

also be positive.

question

answer

$1505

question

A perfectly competitive firm's marginal cost curve is

answer

also its short-run supply curve above the minimum point of the average variable cost curve.

question

Assume a perfectly competitive increasing cost industry is in long run equilibrium. Now assume an increase in demand occurs. After all resulting adjustments have been completed

answer

both the new equilibrium price and industrial output will be greater than before.

question

In long run equilibrium in a perfectly competitive industry, the price of the product must be equal to

answer

the marginal cost of producing the product.

question

In an increasing cost industry

answer

the average total cost curve and the marginal cost curve shift down as firms leave the industry.

question

answer

a lower price and greater output.

question

Individual firms in a perfectly competitive market

answer

can sell all they produce at the market price.

question

The firm's demand curve in a perfectly competitive industry

answer

has a price elasticity of demand equal to minus infinity.

question

One of the major assumptions in perfect competition is

answer

freedom of entry and exit.

question

answer

should shut down.

question

For a perfectly competitive firm, short‑run economic losses are eliminated in the long
run by

answer

firms leaving the industry, which causes higher prices

question

Positive economic profit indicates

answer

a firm is doing better than it could in its best alternative.

question

If firms in a perfectly competitive industry are suffering economic losses in the short run, then in the long run

answer

both a and c above occur.

question

Monopoly is defined as a market structure in which there is

answer

a single seller of a product which has no close substitutes

question

A monopolist

answer

is constrained by the market demand curve in setting price

question

A profit‑maximizing monopolist produces an output level where

answer

marginal revenue equals marginal cost

question

Barriers to entry

answer

may allow monopolies to earn positive economic profit in the long run

question

Suppose that a price‑discriminating monopolist divides its market into two segments. The firm will charge the lower price in the market segment where consumers

answer

have relatively more price elastic demand

question

Which of the following would not be considered price discrimination?

answer

charging more for BMWs than for Chevrolets

question

A monopolist's short run supply curve is

answer

nonexistent.

question

A major whiskey manufacturer failed in its attempt to engage in price discrimination between students and all other consumers. What is a possible explanation for this failure?

answer

There was nothing to prevent the students from reselling the whiskey to other consumers.

question

In the short run, a monopolist will always shut down when

answer

variable cost is greater than total revenue at all output levels

question

The demand curve any monopolist uses in making output decision is

answer

the same as the market demand curve

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order

ECON 202 – exam 2

Order an Essay Now & Get These Features For Free: