Econ 528 Final Gabby from course hero

question

Economies of scale exist as a firm increases its size in the long run because of all the following except:

answer

As a firm expands its production, its
profit margin per-unit of output increases

question

Over the past twenty years, the number of small family farms has fallen significantly and in their place there are fewer, but larger, farms owned by corporations. Which of the following best explains this trend?

answer

Economies of scale in farming

question

The president of Toyota's Georgetown plant was quoted as saying, "Demand for high volumes saps your energy. Over a period of time, it eroded our focus [and] thinned out the expertise and knowledge we painstakingly built up over the years." This quote suggests that:

answer

As Toyota expanded its capacity, it experienced diseconomies of scale.

question

Evaluate the Statement; Cost approach is the easier approach to achieve optimal production when the firm is at the start of their production

answer

FALSE

question

Evaluate the Statement; Resource approach is the easier approach to achieve optimal production after the firm has already established a production plan and requires only incremental changes in their plan to achieve the maximum possible profit.

answer

FALSE

question

The demand for labor is described as a derived demand because:

answer

It is derived from the demand of
products that use labor in the production process.

question

Figure 17-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies.
If the wage rate is $40, how many workers should Dale hire?

answer

3 Units (Workers)

question

Which type of workers is most likely to enjoy substantial economic rent?

answer

Those with high wages which result
from them possessing the innate ability to develop some skill to a very high level

question

Which of the following is a reason why a firm would experience diseconomies of scale?

answer

As the size of the firm increases it
becomes more difficult to coordinate the operations of its manufacturing plants

question

The minimum efficient scale is:

answer

Level of operation where long-run
average costs are lowest.

question

Which of the following is not a reason why firms experience economies of scale?

answer

As output increases, the managers can
begin to have difficultly coordinating the operations of their firms.

question

Economies of scope exist between book publishing and magazine publishing if:

answer

Thecostofpublishingamagazineis
lower for book publishers than for other firms

question

Learning curves represent the relationship between

answer

Averagevariablecostandthe cumulative number of units produced.

question

Answer whether the following statement is true or false: If the marginal revenue product of an input is less than the price of that input, the input is too expensive and the firm should stop using that input and try to find some alternate inputs.

answer

FALSE

question

Answer whether the following statement is true or false: Economic rent for an input is higher if the input is abundant is supply?

answer

FALSE

question

A firm's demand curve for labor slopes downwards because:

answer

Of the law of diminishing marginal returns

question

An increase in input costs in the production of electric automobiles caused the price of electric automobiles to rise. Holding everything else constant, how would this affect the market for gasoline-powered automobiles (a substitute for electric automobiles)?

answer

Thedemandforgasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would increase.

question

A perfectly competitive firm produces 3,000 units of a food at a total cost of $36,000. The fixed cost of production is $20,000. The price of each good is $10. Should the firm continue to produce in the short run?

answer

Yes, it should continue to produce because it is minimizing its loss.

question

Max Shreck, an accountant, quit his $80,000- a-year job and bought an existing tattoo parlor from its previous owner, Sylvia Sidney. The lease has five years remaining and requires a monthly payment of $4,000. Max's explicit cost amounts to $3,000 per month more than his revenue. Should Max continue operating his business?

answer

Max should continue running the tattoo parlor until his lease runs out.

question

A perfectly competitive firm's short-run supply curve is:

answer

Upward sloping and is the portion of the marginal cost curve that lies above the average variable cost curve

question

If a typical firm in a perfectly competitive industry is earning profits, then

answer

New firms will enter in the long run causing market supply to increase, market price to fall and profits to decrease

question

A perfectly competitive wheat farmer in a constant-cost industry produces 3,000 bushels of wheat at a total cost of $36,000. The prevailing market price is $15. What will happen to the market price of wheat in the long run?

answer

The price falls to $12.

question

The reason that the coffeehouse market is monopolistic competitive rather than perfectly competitive is because

answer

Productsaredifferentiated.

question

When a credit card company offers different services with its card, like travel insurance for air travel tickets purchased with the credit card or product insurance for items purchased with the card, the credit card company is trying to:

answer

Convince customers that its card has greater value than those offered by rival firms

question

A company's competitive strategy deals with

answer

How to compete successfully-its plans for positioning the company in the market place, its specific efforts to please customers and improve its competitive strength, and the type of competitive advantage it intends to establish

question

If a producer is not able to expand its plant capacity immediately, it is:

answer

Operating in the short run

question

Assume the market for organically-grown produce is perfectly competitive. All else equal, as farmers find it less profitable to produce and sell organic produce in this market

answer

The supply curve will shift to the left and the equilibrium price will increase.

question

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the Supply curve. Ass a result:

answer

Both the equilibrium price and quantity of MP3 players will increase.

question

Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

answer

An increase in the supply and an increase in the demand greater than the increase in supply

question

A monopolistically competitive firm will:

answer

Have some control over its price
because its product is differentiated.

question

1. Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

answer

Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost.

question

Interdependence of firms is most common in:

answer

Oligopolistic industries.

question

There are five firms in an industry with sales at $5 million, $10 million, $8 million, $12 million, and $10 million, respectively. The HHI is:

answer

2,138

question

Collusion makes firms better off because if they act as a single entity (a cartel) they can reduce output and increase their prices and profits. But some cartels have failed and others are unstable. Which of the following is a reason why cartels often break down?

answer

Each member of a cartel has an incentive to "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the collusive agreement

question

According to the Bertrand model, a firm will assume that rival firms will:

answer

Keep their prices constant

question

In the quantity leadership model:

answer

One firm plays a leadership role and its
competitor's simply react to the leader's quantity.

question

The Bertrand model is a more plausible model of firm behavior than the Cournot model:

answer

When firms sell a differentiated product

question

If dentical firms sell an undifferentiated product, advertising is likely to be

answer

Collectively under taken by the industry group.

question

There are five firms in an industry with sales at $5 million, $10 million, $8 million, $12 million, and $10 million, respectively. What is the proper conclusion that we can draw from the calculated four-firm concentration ratio and HHI?

answer

Both measures indicate that the industry is not perfectly competitive.

question

Oligopolists that have restrictions on productive capacity divide the market between themselves and charge prices greater than marginal costs. In this case they engage in:

answer

Cournot competition.

question

Excess capacity and high advertising expenditures are encountered in:

answer

Monopolistic competition.

question

The reason that the Fisherman's Friend restaurant in Stonington, Maine had a monopoly on selling seafood dinners in that town is most likely due to:

answer

No competitors apparently found the profit level attractive enough to enter the market

question

Relative to a perfectly competitive market, a monopoly results in

answer

A gain in producer surplus less than the loss in consumer surplus.

question

An oligopolistic industry is characterized by all of the following except:

answer

Firms pursuing aggress business strategies, independent of rival's strategies

question

A member of a cartel like OPEC has an incentive to:

answer

Agree to a low cartel production level and then produce more than its quota

question

"Tom and Jack are two local petrol stations. Although they have different constant marginal costs, they both survive continued competition." Tom and Jack do not constitute:

answer

Bertrand oligopoly

question

Suppose that the duopolists competing in Cournot fashion agree to produce the collusive output. Given that firm two commits to the collusive output, it pays firm one to:

answer

Cheat by producing a higher level of output

question

An industry has a 4-firm concentration of 85. We would call this industry a:

answer

Oligopoly

question

A firm that is threatened by the potential entry of competitors into a market builds excess production capacity. This is an example of:

answer

Entry Barriers to prevent potential entrants

question

Suppose two firms in a duopoly implicitly collude and charge a high price. How might each firm benefit from advertising that it will match the lowest price offered by its competitor?

answer

The advertisement ensures that the other firm does not cheat. If a firm cheats on the agreement and charges the lower price, the rival firm will retaliate by doing the same.

question

Which of the following is an example of bundling:

answer

A $95 ticket to the Magic Kingdom gives you entrance to the park and free access to all rides

1 of 51

question

Economies of scale exist as a firm increases its size in the long run because of all the following except:

answer

As a firm expands its production, its
profit margin per-unit of output increases

question

answer

Economies of scale in farming

question

answer

As Toyota expanded its capacity, it experienced diseconomies of scale.

question

Evaluate the Statement; Cost approach is the easier approach to achieve optimal production when the firm is at the start of their production

answer

FALSE

question

answer

FALSE

question

The demand for labor is described as a derived demand because:

answer

It is derived from the demand of
products that use labor in the production process.

question

Figure 17-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies.
If the wage rate is $40, how many workers should Dale hire?

answer

3 Units (Workers)

question

Which type of workers is most likely to enjoy substantial economic rent?

answer

Those with high wages which result
from them possessing the innate ability to develop some skill to a very high level

question

Which of the following is a reason why a firm would experience diseconomies of scale?

answer

As the size of the firm increases it
becomes more difficult to coordinate the operations of its manufacturing plants

question

The minimum efficient scale is:

answer

Level of operation where long-run
average costs are lowest.

question

Which of the following is not a reason why firms experience economies of scale?

answer

As output increases, the managers can
begin to have difficultly coordinating the operations of their firms.

question

Economies of scope exist between book publishing and magazine publishing if:

answer

Thecostofpublishingamagazineis
lower for book publishers than for other firms

question

Learning curves represent the relationship between

answer

Averagevariablecostandthe cumulative number of units produced.

question

answer

FALSE

question

Answer whether the following statement is true or false: Economic rent for an input is higher if the input is abundant is supply?

answer

FALSE

question

A firm's demand curve for labor slopes downwards because:

answer

Of the law of diminishing marginal returns

question

answer

Thedemandforgasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would increase.

question

answer

Yes, it should continue to produce because it is minimizing its loss.

question

answer

Max should continue running the tattoo parlor until his lease runs out.

question

A perfectly competitive firm's short-run supply curve is:

answer

Upward sloping and is the portion of the marginal cost curve that lies above the average variable cost curve

question

If a typical firm in a perfectly competitive industry is earning profits, then

answer

New firms will enter in the long run causing market supply to increase, market price to fall and profits to decrease

question

answer

The price falls to $12.

question

The reason that the coffeehouse market is monopolistic competitive rather than perfectly competitive is because

answer

Productsaredifferentiated.

question

answer

Convince customers that its card has greater value than those offered by rival firms

question

A company's competitive strategy deals with

answer

question

If a producer is not able to expand its plant capacity immediately, it is:

answer

Operating in the short run

question

Assume the market for organically-grown produce is perfectly competitive. All else equal, as farmers find it less profitable to produce and sell organic produce in this market

answer

The supply curve will shift to the left and the equilibrium price will increase.

question

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the Supply curve. Ass a result:

answer

Both the equilibrium price and quantity of MP3 players will increase.

question

Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?

answer

An increase in the supply and an increase in the demand greater than the increase in supply

question

A monopolistically competitive firm will:

answer

Have some control over its price
because its product is differentiated.

question

1. Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly?

answer

Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost.

question

Interdependence of firms is most common in:

answer

Oligopolistic industries.

question

There are five firms in an industry with sales at $5 million, $10 million, $8 million, $12 million, and $10 million, respectively. The HHI is:

answer

2,138

question

answer

Each member of a cartel has an incentive to "cheat" on the collusive agreement by producing more than its share when everyone else sticks with the collusive agreement

question

According to the Bertrand model, a firm will assume that rival firms will:

answer

Keep their prices constant

question

In the quantity leadership model:

answer

One firm plays a leadership role and its
competitor's simply react to the leader's quantity.

question

The Bertrand model is a more plausible model of firm behavior than the Cournot model:

answer

When firms sell a differentiated product

question

If dentical firms sell an undifferentiated product, advertising is likely to be

answer

Collectively under taken by the industry group.

question

answer

Both measures indicate that the industry is not perfectly competitive.

question

Oligopolists that have restrictions on productive capacity divide the market between themselves and charge prices greater than marginal costs. In this case they engage in:

answer

Cournot competition.

question

Excess capacity and high advertising expenditures are encountered in:

answer

Monopolistic competition.

question

The reason that the Fisherman's Friend restaurant in Stonington, Maine had a monopoly on selling seafood dinners in that town is most likely due to:

answer

No competitors apparently found the profit level attractive enough to enter the market

question

Relative to a perfectly competitive market, a monopoly results in

answer

A gain in producer surplus less than the loss in consumer surplus.

question

An oligopolistic industry is characterized by all of the following except:

answer

Firms pursuing aggress business strategies, independent of rival's strategies

question

A member of a cartel like OPEC has an incentive to:

answer

Agree to a low cartel production level and then produce more than its quota

question

"Tom and Jack are two local petrol stations. Although they have different constant marginal costs, they both survive continued competition." Tom and Jack do not constitute:

answer

Bertrand oligopoly

question

Suppose that the duopolists competing in Cournot fashion agree to produce the collusive output. Given that firm two commits to the collusive output, it pays firm one to:

answer

Cheat by producing a higher level of output

question

An industry has a 4-firm concentration of 85. We would call this industry a:

answer

Oligopoly

question

A firm that is threatened by the potential entry of competitors into a market builds excess production capacity. This is an example of:

answer

Entry Barriers to prevent potential entrants

question

Suppose two firms in a duopoly implicitly collude and charge a high price. How might each firm benefit from advertising that it will match the lowest price offered by its competitor?

answer

The advertisement ensures that the other firm does not cheat. If a firm cheats on the agreement and charges the lower price, the rival firm will retaliate by doing the same.

question

Which of the following is an example of bundling:

answer

A $95 ticket to the Magic Kingdom gives you entrance to the park and free access to all rides

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