Econ 2314 McClung Final - Assignment Essays

question

Economic questions always deal with:

answer

choice in the face of limited resources

question

The central concern of economics:

answer

scarcity

question

If all the worlds resources were to magically decrease a hundredfold, then:

answer

the scarcity principle would still govern behavior

question

At the very least , Joe Average and Bill gates are both identically limited by:

answer

the 24 hours that compromise a day

question

Chris has a one-hour break between classes every wednesday. Chris can either stay at the library and study or go to the gym and workout. The decision Chris must make is:

answer

an economic problem because chris has only one hour during which he can study or work out

question

The cost-benefit principle indicates that an action should be taken

answer

if the total benefits exceed the total costs

question

The seventh glass of soda that Tim consumes will produce an extra benefit of 10 cents and has an extra cost of
zero (Tim is eating at the cafeteria). The cost-benefit principle predicts that Tim will:

answer

drink the seventh glass and continue until the marginal benefit of drinking another glass of soda is zero

question

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and
did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000
per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000
per year. No Name U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values
attending NoName at $15,000 per year.
The opportunity cost of attending Elite U is:

answer

20,000

question

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and
did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000
per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000
per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values
attending NoName at $15,000 per year.
Larry maximizes his surplus by attending:

answer

State College, because the difference between the benefit and cost is greatest there

question

The opportunity cost of an activity is the value of:

answer

the next best alternative

question

having a comparative advantage in a particular task means that

answer

you give up less to accomplish that task than do others

question

which of the following is always true
A. Absolute advantage implies comparative advantage.
B. Comparative advantage does not require absolute advantage.
C. Absolute advantage requires comparative advantage.
D. Comparative advantage requires absolute advantage.

answer

comparative advantage does not require absolute advantage

question

Application of the principle of comparative advantage leads to:

answer

greater specialization of labor and the factors of production

question

the production possibilities curve shows:

answer

the maximum production of one good for every possible production level of the other good

question

According to the principle of increasing opportunity cost, expanding production requires using resources in which order?

answer

starting with the resource with the lowest opportunity cost, and proceeding to the higher opportunity cost resources

question

the demand curve illustrates the fact that consumers

answer

tend to purchase more of a good as the price falls

question

the supply curve illustrates that firms

answer

increase the quantity supplied of a good when its price rises

question

A market comprised of a downward-sloping demand curve that intersects an upward-sloping supply curve is said to
be stable because

answer

at any price other than equilibrium forced in the market move price towards the equilibrium

question

A market in disequilibrium would feature

answer

either excess supply or excess demand

question

a shortage occurs when:

answer

quantity demanded exceeds quantity supplied

question

a movement along a demand curve from one price-quantity combination to another is called:

answer

a change in quantity demanded

question

if the demand for a good decreases as income decreases it is an

answer

normal good

question

what might cause the a demand function to shift to the right

answer

an increase in the price of a substitute

question

what might cause a demand function shift to the left

answer

a decrease in the price of a substitute

question

if the price of computers increases and the demand for monitors decreases as a result, then:

answer

computers and monitors are complements

question

suppose that the technology used to manufacture laptops has improved. the likely result would be:

answer

an increase in supply of laptops

question

in general, when the demand curve shifts to the right and supply remains constant then:

answer

the equilibrium quantity will rise

question

the percentage change in quantity demanded that results form the percentage change in price is known as the:

answer

price elasticity of demand

question

if the price of textbooks increases by one percent and the quantity demanded falls by one half percent, then the demand for textbooks is

answer

price inelastic

question

Price elasticity of demand is often expressed as a positive number because:

answer

it's convenient to use absolute values even though the formula yields non-positive numbers

question

if the price elasticity of demand for tickets to a football game is 2 then, when the price increases by 1% quantity demanded decreased by:

answer

question

If the percentage change in the price of a good is less than the percentage change in the quantity demanded of
that good then the demand for that good, with respect to price, is:

answer

elastic

question

when the demand for a good is inelastic, that good is likely to have:

answer

few close substitutes

question

if the quantity demanded of a good is Q when the price for the good is P, the price elasticity of demand for that good at that point:

answer

(P/Q)*(1/slope)

question

if the slope of the demand curve is -1.4, price is $5and quantity demanded is 13 units, the price elasticity of demand is:

answer

.27

question

economics is the study of:

answer

choice in the face of limited resources

question

the scarcity principle applies to:

answer

everyone

question

Jan spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and drinks rather than spending an equal amount of money to go to a movie. Her opportunity cost of going to the beach is:

answer

the value she places on seeing the movie

question

The Scarcity Principle tells us ______, and the Cost-Benefit Principle tells us ______.

answer

the choices that must be made, how to make good choices

question

The Cost Benefit principle tells us _____ and the scarcity principle tells us ______

answer

how to make good choices, the good choices that must be made

question

Dean should play golf instead of preparing for tomorrow's exam in economics if:

answer

the economic surplus from playing golf is greater than the economic surplus from studying.

question

Moe has a big exam tomorrow. He considered studying this evening, but decided to hang out with Curly instead. If neither activity involves any explicit costs, and Moe always chooses rationally, it must be true that:

answer

Moe gets more benefit from spending time with Curly than from studying

question

For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your marginal cost of the 100th meal is:

answer

question

In general, individuals and nations should specialize in producing those goods for which they have an

answer

absolute advantage

question

Points that lie outside the production possibilities curve are ______, and points that lie inside the production possibilities curve are ______.

answer

efficient; inefficient

question

if a country is producing at point where an increase in the production of one good requires a reduction in the production of another good, then it must be producing at an:

answer

unattainable point

question

Points that lie below the production possibilities curve are inefficient because:

answer

producers face scarcity

question

The idea that tradeoffs have to be made when resources are scarce is reflected in the fact that:

answer

the PPC has a negative slope

question

the benefits of specialization can be used to explain why

answer

machines are more productive than human workers

question

"Holding all other relevant factors constant, consumers will purchase more of a good as the price falls." This
statement reflects the behavior underlying:

answer

the demand curve

question

Sellers tend to offer _______ for sale as price increases, and so the supply curve is ______ sloping.

answer

more; upward

question

As the price of a good rises:

answer

more firms can cover their opportunity costs of producing the good

question

When the price of a good is below its equilibrium value:

answer

consumers will bid the price up

question

In a free market, if the price of a good is above the equilibrium price, then;

answer

suppliers, dissatisfied with growing inventories, will lower the price

question

An increase in the quantity demanded of tea occurs whenever

answer

the price of the tea falls

question

"As the price of personal computers continues to fall, demand increases." This headline is inaccurate because:

answer

a falling price for personal computers increases quantity demanded, not demand.

question

What might cause a demand function to shift to the right?

answer

an increase in the price of a substitute

question

decrease in the demand for bananas with no concurrent change in the supply of bananas will result in a
________ equilibrium price and a(n) ________ equilibrium quantity.

answer

lower; lower

question

The price elasticity of demand is a measure of:

answer

the change in quantity demanded of a good that results from a change in its price.

question

If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then the
price elasticity of demand is equal to:

answer

question

The demand for a good is inelastic with respect to price if the price elasticity of demand is:

answer

less than one

question

If the demand for a good is highly elastic, that good is likely to have:

answer

many close substitutes

question

Which of the following is likely to have the highest price elasticity of demand?

answer

nike running shoes

question

Jeans in general have fewer close substitutes than a specific brand of jeans. Therefore, the demand for jeans in
general will be _______ than the demand for a specific brand of jeans.

answer

less elastic

question

If the absolute value of slope of the demand curve is 2.5, price is $6 per unit, and the quantity demanded is 8 units,
then the price elasticity of demand is:

answer

question

Suppose two demand curves intersect and so have a point in common. At that point, demand shown by the
steeper curve will be _______ the flatter curve.

answer

less elastic than

question

Marginal cost is calculated as

answer

the change in total costs divided by the change in output

question

In general, if the price of a fixed factor of production increases

answer

marginal costs are unchanged

question

Firms maximize profit when

answer

marginal costs equal price

question

if the firm produces an output level where price is LESS than marginal costs, then the firm should

answer

contract output to earn greater profits and smaller losses

question

if an industry experiences an increase in the number of firms then

answer

the industry supply curve will shift right

question

if an industry experiences an decrease in the number of firms then

answer

the industry supply curve will shift left

question

part of the upward sloping portion of the marginal cost curve is the firm's

answer

supply curve

question

price ceilings result in

answer

shortages

question

consumer surplus is the value of

answer

the cumulative difference between what consumers are willing to pay and the price they actually pay

question

implicit costs

answer

measure the forgone opportunities of the owners of business

question

accounting profits

answer

the difference between total revenues and explicit costs

question

economic profits

answer

equal to total revenue minus both explicit and implicit costs

question

in the perfectly competitive industry economic profits

answer

serve to motivate entry or exit

question

Assume all firms in a particular perfectly competitive industry are earning economic profits. This will cause firms to _____ the industry, which will continue until _____

answer

enter; economic profits are zero

question

if you were to open a business in an industry that is approximately perfectly competitive, you would expect that:

answer

in the long run you would earn zero economic profits and positive accounting profits

question

The common feature in pure monopoly, oligopoly and monopolistic competition is

answer

downward sloping demand

question

in order to sell another unit, an imperfectly competitive firm must:

answer

lower its price

question

economies of scale exist when

answer

average costs fall as the scale of production grows

question

a firm that emerges as the only seller in an industry with economies of scale is termed

answer

natural monopoly

question

for all firms, the additional revenue collected from the sale of one additional unit of output is

answer

marginal revenue

question

Suppose a monopolist is charging $12 for output. One can infer that

answer

marginal revenues are less than $12

question

because the monopolist charges a price in excess of marginal costs, it must be the case that the monopolist

answer

produces less than the socially efficient level of output

question

price discrimination means charging

answer

different prices to different consumers when production costs are the same

question

when a consumer must take some sort of additional action to revive a lower price, the consumer is being subjected to:

answer

the hurdle method of price discrimination

question

The most important decision that sellers make is:

answer

whether to produce another unit

question

The primary objective of most private firms is to

answer

maximize profit

question

total revenue minuts total explicit and implicit cost defines:

answer

profit

question

when economists use standard supply and demand theory, they are assuming that the supply curve describes:

answer

firms that operate in perfectly competitive markets

question

a fixed factor of production:

answer

is fixed only in the short run

question

a variable factor of production

answer

is variable in both the short run and the long run

question

If a firm spends $400 to produce 20 units of output and spends $880 to produce 40 units, then between 20 and 40 units of output the marginal cost of production is:

answer

$24

question

Marginal Cost is calculated as:

answer

the change in total costs divided by the change in output

question

Assume that a firm uses 13 employee-hours and an office to produce 100 units of output. The price of output is $5, the wage rate is $0 and rent is $200. The firm will earn a ______ of ______

answer

profit; $170

question

if a firm stops production then its:

answer

variable costs drop to zero

question

the production function represents

answer

the relationship between the quantity of inputs and the quantity of outputs

question

when a firm doubles its inputs, its output:

answer

could do anything

question

the increase in output that is generated by an additional unit of input is called the:

answer

marginal product

question

a profit-maximizing firm will shut down when:

answer

total revenues are less than the cost of variable factors of production

question

suppose a perfectly competitive firm knows that it is not going to shut down, but it is going to earn a loss. It should pick the output level where

answer

price equals marginal cost

question

In the short run, if a firm chooses to operate and produce output, it must be the case that: `

answer

total revenues are greater than or equal to the cost of variable factors of production

question

Supposed a firm collcting $1700 in total revenues and the total costs of its variable factors of production $1900 at its current level of output. One can predict the firm will

answer

shut down

question

if a perfectly competitive firm produces an output level where price is greater than marginal costs of production should:

answer

expand output to earn greater profits or smaller losses

question

an increase in the price the firm receives for its output will cause the firm too:

answer

expand output to earn greater profits or smaller losses

question

a perfectly competitive firm's output price is $5 and the firm is producing 37 units with a marginal cost of $3. The firm should:

answer

increase production

question

a perfectly competitive firm's output price is $8 and the firm is producing 77 units with a marginal cost of $11. The firm should:

answer

decrease production

question

Generally, ______ motivate firms to enter an industry an industry while _____ motivate firms to exit an industry

answer

economic profits, economic losses

question

Suppose all firs in a perfectly competitive industry are experiencing economic profits, one would expect that over time the number of firms will _____ and the market price will ______

answer

rise; fall

question

if all firms in a perfectly competitive industry earn a normal profit, then:

answer

the number of firms in the industry is stable

question

pure monopoly exists when:

answer

a single firm produces a good with no close substitutes

question

in order to sell another unit, an imperfectly competitive firm must:

answer

lower its price

question

Patents and copyrights, which confer market power, exist to:

answer

protect research, development, and creative expression

question

For a perfectly competitive firms price _____ marginal revenue; for monopolists price _____ marginal revenue

answer

equals; is greater than

1 of 118

question

Economic questions always deal with:

answer

choice in the face of limited resources

question

The central concern of economics:

answer

scarcity

question

If all the worlds resources were to magically decrease a hundredfold, then:

answer

the scarcity principle would still govern behavior

question

At the very least , Joe Average and Bill gates are both identically limited by:

answer

the 24 hours that compromise a day

question

Chris has a one-hour break between classes every wednesday. Chris can either stay at the library and study or go to the gym and workout. The decision Chris must make is:

answer

an economic problem because chris has only one hour during which he can study or work out

question

The cost-benefit principle indicates that an action should be taken

answer

if the total benefits exceed the total costs

question

answer

drink the seventh glass and continue until the marginal benefit of drinking another glass of soda is zero

question

answer

20,000

question

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and
did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000
per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000
per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values
attending NoName at $15,000 per year.
Larry maximizes his surplus by attending:

answer

State College, because the difference between the benefit and cost is greatest there

question

The opportunity cost of an activity is the value of:

answer

the next best alternative

question

having a comparative advantage in a particular task means that

answer

you give up less to accomplish that task than do others

question

answer

comparative advantage does not require absolute advantage

question

Application of the principle of comparative advantage leads to:

answer

greater specialization of labor and the factors of production

question

the production possibilities curve shows:

answer

the maximum production of one good for every possible production level of the other good

question

According to the principle of increasing opportunity cost, expanding production requires using resources in which order?

answer

starting with the resource with the lowest opportunity cost, and proceeding to the higher opportunity cost resources

question

the demand curve illustrates the fact that consumers

answer

tend to purchase more of a good as the price falls

question

the supply curve illustrates that firms

answer

increase the quantity supplied of a good when its price rises

question

A market comprised of a downward-sloping demand curve that intersects an upward-sloping supply curve is said to
be stable because

answer

at any price other than equilibrium forced in the market move price towards the equilibrium

question

A market in disequilibrium would feature

answer

either excess supply or excess demand

question

a shortage occurs when:

answer

quantity demanded exceeds quantity supplied

question

a movement along a demand curve from one price-quantity combination to another is called:

answer

a change in quantity demanded

question

if the demand for a good decreases as income decreases it is an

answer

normal good

question

what might cause the a demand function to shift to the right

answer

an increase in the price of a substitute

question

what might cause a demand function shift to the left

answer

a decrease in the price of a substitute

question

if the price of computers increases and the demand for monitors decreases as a result, then:

answer

computers and monitors are complements

question

suppose that the technology used to manufacture laptops has improved. the likely result would be:

answer

an increase in supply of laptops

question

in general, when the demand curve shifts to the right and supply remains constant then:

answer

the equilibrium quantity will rise

question

the percentage change in quantity demanded that results form the percentage change in price is known as the:

answer

price elasticity of demand

question

if the price of textbooks increases by one percent and the quantity demanded falls by one half percent, then the demand for textbooks is

answer

price inelastic

question

Price elasticity of demand is often expressed as a positive number because:

answer

it's convenient to use absolute values even though the formula yields non-positive numbers

question

if the price elasticity of demand for tickets to a football game is 2 then, when the price increases by 1% quantity demanded decreased by:

answer

question

If the percentage change in the price of a good is less than the percentage change in the quantity demanded of
that good then the demand for that good, with respect to price, is:

answer

elastic

question

when the demand for a good is inelastic, that good is likely to have:

answer

few close substitutes

question

if the quantity demanded of a good is Q when the price for the good is P, the price elasticity of demand for that good at that point:

answer

(P/Q)*(1/slope)

question

if the slope of the demand curve is -1.4, price is $5and quantity demanded is 13 units, the price elasticity of demand is:

answer

.27

question

economics is the study of:

answer

choice in the face of limited resources

question

the scarcity principle applies to:

answer

everyone

question

answer

the value she places on seeing the movie

question

The Scarcity Principle tells us ______, and the Cost-Benefit Principle tells us ______.

answer

the choices that must be made, how to make good choices

question

The Cost Benefit principle tells us _____ and the scarcity principle tells us ______

answer

how to make good choices, the good choices that must be made

question

Dean should play golf instead of preparing for tomorrow's exam in economics if:

answer

the economic surplus from playing golf is greater than the economic surplus from studying.

question

answer

Moe gets more benefit from spending time with Curly than from studying

question

For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your marginal cost of the 100th meal is:

answer

question

In general, individuals and nations should specialize in producing those goods for which they have an

answer

absolute advantage

question

Points that lie outside the production possibilities curve are ______, and points that lie inside the production possibilities curve are ______.

answer

efficient; inefficient

question

if a country is producing at point where an increase in the production of one good requires a reduction in the production of another good, then it must be producing at an:

answer

unattainable point

question

Points that lie below the production possibilities curve are inefficient because:

answer

producers face scarcity

question

The idea that tradeoffs have to be made when resources are scarce is reflected in the fact that:

answer

the PPC has a negative slope

question

the benefits of specialization can be used to explain why

answer

machines are more productive than human workers

question

"Holding all other relevant factors constant, consumers will purchase more of a good as the price falls." This
statement reflects the behavior underlying:

answer

the demand curve

question

Sellers tend to offer _______ for sale as price increases, and so the supply curve is ______ sloping.

answer

more; upward

question

As the price of a good rises:

answer

more firms can cover their opportunity costs of producing the good

question

When the price of a good is below its equilibrium value:

answer

consumers will bid the price up

question

In a free market, if the price of a good is above the equilibrium price, then;

answer

suppliers, dissatisfied with growing inventories, will lower the price

question

An increase in the quantity demanded of tea occurs whenever

answer

the price of the tea falls

question

"As the price of personal computers continues to fall, demand increases." This headline is inaccurate because:

answer

a falling price for personal computers increases quantity demanded, not demand.

question

What might cause a demand function to shift to the right?

answer

an increase in the price of a substitute

question

decrease in the demand for bananas with no concurrent change in the supply of bananas will result in a
________ equilibrium price and a(n) ________ equilibrium quantity.

answer

lower; lower

question

The price elasticity of demand is a measure of:

answer

the change in quantity demanded of a good that results from a change in its price.

question

If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then the
price elasticity of demand is equal to:

answer

question

The demand for a good is inelastic with respect to price if the price elasticity of demand is:

answer

less than one

question

If the demand for a good is highly elastic, that good is likely to have:

answer

many close substitutes

question

Which of the following is likely to have the highest price elasticity of demand?

answer

nike running shoes

question

Jeans in general have fewer close substitutes than a specific brand of jeans. Therefore, the demand for jeans in
general will be _______ than the demand for a specific brand of jeans.

answer

less elastic

question

If the absolute value of slope of the demand curve is 2.5, price is $6 per unit, and the quantity demanded is 8 units,
then the price elasticity of demand is:

answer

question

Suppose two demand curves intersect and so have a point in common. At that point, demand shown by the
steeper curve will be _______ the flatter curve.

answer

less elastic than

question

Marginal cost is calculated as

answer

the change in total costs divided by the change in output

question

In general, if the price of a fixed factor of production increases

answer

marginal costs are unchanged

question

Firms maximize profit when

answer

marginal costs equal price

question

if the firm produces an output level where price is LESS than marginal costs, then the firm should

answer

contract output to earn greater profits and smaller losses

question

if an industry experiences an increase in the number of firms then

answer

the industry supply curve will shift right

question

if an industry experiences an decrease in the number of firms then

answer

the industry supply curve will shift left

question

part of the upward sloping portion of the marginal cost curve is the firm's

answer

supply curve

question

price ceilings result in

answer

shortages

question

consumer surplus is the value of

answer

the cumulative difference between what consumers are willing to pay and the price they actually pay

question

implicit costs

answer

measure the forgone opportunities of the owners of business

question

accounting profits

answer

the difference between total revenues and explicit costs

question

economic profits

answer

equal to total revenue minus both explicit and implicit costs

question

in the perfectly competitive industry economic profits

answer

serve to motivate entry or exit

question

Assume all firms in a particular perfectly competitive industry are earning economic profits. This will cause firms to _____ the industry, which will continue until _____

answer

enter; economic profits are zero

question

if you were to open a business in an industry that is approximately perfectly competitive, you would expect that:

answer

in the long run you would earn zero economic profits and positive accounting profits

question

The common feature in pure monopoly, oligopoly and monopolistic competition is

answer

downward sloping demand

question

in order to sell another unit, an imperfectly competitive firm must:

answer

lower its price

question

economies of scale exist when

answer

average costs fall as the scale of production grows

question

a firm that emerges as the only seller in an industry with economies of scale is termed

answer

natural monopoly

question

for all firms, the additional revenue collected from the sale of one additional unit of output is

answer

marginal revenue

question

Suppose a monopolist is charging $12 for output. One can infer that

answer

marginal revenues are less than $12

question

because the monopolist charges a price in excess of marginal costs, it must be the case that the monopolist

answer

produces less than the socially efficient level of output

question

price discrimination means charging

answer

different prices to different consumers when production costs are the same

question

when a consumer must take some sort of additional action to revive a lower price, the consumer is being subjected to:

answer

the hurdle method of price discrimination

question

The most important decision that sellers make is:

answer

whether to produce another unit

question

The primary objective of most private firms is to

answer

maximize profit

question

total revenue minuts total explicit and implicit cost defines:

answer

profit

question

when economists use standard supply and demand theory, they are assuming that the supply curve describes:

answer

firms that operate in perfectly competitive markets

question

a fixed factor of production:

answer

is fixed only in the short run

question

a variable factor of production

answer

is variable in both the short run and the long run

question

If a firm spends $400 to produce 20 units of output and spends $880 to produce 40 units, then between 20 and 40 units of output the marginal cost of production is:

answer

$24

question

Marginal Cost is calculated as:

answer

the change in total costs divided by the change in output

question

Assume that a firm uses 13 employee-hours and an office to produce 100 units of output. The price of output is $5, the wage rate is $0 and rent is $200. The firm will earn a ______ of ______

answer

profit; $170

question

if a firm stops production then its:

answer

variable costs drop to zero

question

the production function represents

answer

the relationship between the quantity of inputs and the quantity of outputs

question

when a firm doubles its inputs, its output:

answer

could do anything

question

the increase in output that is generated by an additional unit of input is called the:

answer

marginal product

question

a profit-maximizing firm will shut down when:

answer

total revenues are less than the cost of variable factors of production

question

suppose a perfectly competitive firm knows that it is not going to shut down, but it is going to earn a loss. It should pick the output level where

answer

price equals marginal cost

question

In the short run, if a firm chooses to operate and produce output, it must be the case that: `

answer

total revenues are greater than or equal to the cost of variable factors of production

question

Supposed a firm collcting $1700 in total revenues and the total costs of its variable factors of production $1900 at its current level of output. One can predict the firm will

answer

shut down

question

if a perfectly competitive firm produces an output level where price is greater than marginal costs of production should:

answer

expand output to earn greater profits or smaller losses

question

an increase in the price the firm receives for its output will cause the firm too:

answer

expand output to earn greater profits or smaller losses

question

a perfectly competitive firm's output price is $5 and the firm is producing 37 units with a marginal cost of $3. The firm should:

answer

increase production

question

a perfectly competitive firm's output price is $8 and the firm is producing 77 units with a marginal cost of $11. The firm should:

answer

decrease production

question

Generally, ______ motivate firms to enter an industry an industry while _____ motivate firms to exit an industry

answer

economic profits, economic losses

question

Suppose all firs in a perfectly competitive industry are experiencing economic profits, one would expect that over time the number of firms will _____ and the market price will ______

answer

rise; fall

question

if all firms in a perfectly competitive industry earn a normal profit, then:

answer

the number of firms in the industry is stable

question

pure monopoly exists when:

answer

a single firm produces a good with no close substitutes

question

in order to sell another unit, an imperfectly competitive firm must:

answer

lower its price

question

Patents and copyrights, which confer market power, exist to:

answer

protect research, development, and creative expression

question

For a perfectly competitive firms price _____ marginal revenue; for monopolists price _____ marginal revenue

answer

equals; is greater than

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