ECON 5357 Final Exam - Assignment Essays

question

The primary virtue of managerial economics lies in its

answer

usefulness

question

Business profit is

answer

the residual of sales revenue minus the explicit accounting costs of doing business

question

Value maximization is broader than profit maximization because it considers

answer

interest rates

question

Economic profit equals

answer

business profits minus implicit costs

question

The value of a firm is equal to

answer

the present value of all future cash flows.

question

The value of the firm decreases with a decrease in

answer

total revenue

question

A TV retailer faces the following revenue and cost relationships:

TR = $1800 Q - 0.006 Q2; MR = ____________; TC = 12100000 + 800Q + 0.004 Q2 ; MC = 800 + 0.008Q.

Find the profit maximizing quantity

answer

50000.

question

The breakeven level of output occurs where

answer

total profit equals zero

question

Incremental profit is

answer

the change in profit caused by a given managerial decision

question

If total revenue increases at a constant rate as output increases, marginal revenue:

answer

equals average revenue

question

Total revenue is maximized at the point where marginal

answer

revenue equals zero

question

Average cost minimization occurs at the point where

answer

MC = AC

question

A TV retailer faces the following revenue and cost relationships:

TR = $1800 Q - 0.006 Q2; MR = ____________; TC = 12100000 + 800Q + 0.004 Q2 ; MC = 800 + 0.008Q.

Find the profit maximizing price

answer

$1500.

question

High correlation among independent variables (X) leads to

answer

multicollinearity

question

Statistical analysis of economic relations focuses on the estimation and interpretation of

answer

sample statistics

question

In a uniform distribution, the mode

answer

equals the median

question

A linear model implies

answer

a constant effect of X on Y

question

If demand decreases and, at the same time, supply increases, the

answer

equilibrium price will decrease while quantity produced and sold could increase, decrease, or stay the same

question

Between 1970 and 2013, the demand curve for eggs decreased 5% while, over the same period, the supply of eggs increased 15%. What's the best answer for the observed movement of prices and quantities exhanged for eggs over these years

answer

Prices will fall, but quantities exchanged will rise

question

Holding all else equal, an unnecessary increase in federally-mandated auto safety requirements leads to a decrease in

answer

auto supply

question

Let's estimate the point price elasticity using the demand function, Q = 30 - 4 (Price) + 2 (Income) + 5 (Advertising). Set Income= 60, Advertising = 20. If Price equals $40, find the price elasticity of demand

answer

-1.77.

question

If the price of a service goes from $90 to $80 and price elasticity of demand is around - 6.0, then total revenue (TR) must _________.

answer

rise

question

If the market price is higher than the equilibrium price a

answer

surplus exists and the market price will fall until it equals the equilibrium price and the surplus is eliminated

question

The equilibrium market price and quantity of beef (assumed to be a "normal good") would increase if

answer

consumer income increased

question

If demand and supply both increase, the

answer

quantity produced and sold will increase while the equilibrium price could increase, decrease, or remain constant

question

A multiple regression model involves two or more:

answer

independent (X) variables

question

Economic profit equals

answer

business profits minus implicit costs

question

The breakeven level of output occurs where

answer

total profit equals zero

question

If marginal cost (mc) is less than zero, then the price elasticity of demand is

answer

inelastic

question

Total revenue is maximized at the point where

answer

marginal revenue equals zero

question

Average cost minimization occurs at the point where

answer

MC = AC

question

Marginal profit equals

answer

the change in total profit following a one-unit change in output

question

High correlation among independent (X) variables leads to

answer

multicollinearity

question

In a uniform distribution, the mode

answer

equals the median

question

A linear model implies

answer

a constant effect of X on Y

question

Estimate the price impact of a 2% reduction in the world's oil supply (say, due to a supply disruption in the oil-rich Middle East). Please assume a price elasticity of demand (Ep) of oil = -0.2

answer

10%

question

The equilibrium ("market-clearing") market price of a service is the

answer

price where the quantity demanded equals the quantity supplied.

question

If the market price is higher than the equilibrium price a

answer

surplus exists and the market price will fall until it equals the equilibrium price and the surplus is eliminated

question

Suppose that the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

answer

quantity produced and sold will increase while the equilibrium price could increase, decrease, or remain constant.

question

According to the law of diminishing marginal utility

answer

as the consumption of a given product rises, the added benefit eventually diminishes.

question

Let's estimate the point price elasticity using the demand function, Q = 30 - 4 (Price) + 2 (Income) + 5 (Advertising). Set Income= 60, Advertising = 20. If Price equals $55, find the price elasticity of demand

answer

-6.67

question

Use the following story about cotton to answer the following question.

"The price elasticity of demand for cotton is around 0.1

answer

The quantity demanded of cotton will fall by 1%

question

Use the following quote to answer question #17:

"If, at the initial price, there is excess demand (a "shortage"), the price will rise. The increase in price has two consequences: It shifts the demand curve down since people buy less at a higher price, and it shifts the supply curve up because producers find it profitable to produce more output at a higher price. Price will continue to adjust until there is no excess demand."

answer

The quotation confuses movements along curves with shifts in curves

question

With inelastic demand, a price increase produces

answer

higher profits

question

A direct relation exists between changes in price of one product (A) and the demand for another product (B). These two products are

answer

substitutes

question

The demand for a product tends to be elastic if

answer

it has many substitutes

question

If the income elasticity of demand for a good (or service) is greater than one, the good/service is:

answer

a cyclical normal good

question

Use the following information to answer this question.

Market demand is Qd = 400 - 10 Price; Market supply is Qs = 40 + 30 Price. Find the price elasticity of demand when Price = $4.

answer

-0.11

question

If price elasticity of demand (eP ) = -3 and MC = $0.66, the profit-maximizing price is

answer

$0.99

question

With elastic demand:

answer

a given percentage increase in price causes quantity to decrease by a larger percentage

question

When marginal cost is greater than zero, the profit-maximizing point price elasticity of demand must be (measured in absolute value):

answer

greater than one

question

A forecast method based on the informed opinion of several individuals is called

answer

panel consensus

question

Growth trend analysis assumes

answer

constant percentage change over time.

question

A secular trend is the:

answer

long-run pattern of increase or decrease in a series of economic data.

question

Linear trend analysis assumes

answer

constant unit change in an important economic variable over time

question

Time-series methods

answer

use historical data as the basis for projection

question

If we observe the price (measured in constant $) of some product (say "eggs") declining over the years 1980 to 2013 while the quantity of the product (eggs) bought and sold increases, which of the following must have occurred?

answer

The demand curve has increased while the supply curve has increased more than the increase in demand

question

Econometric methods

answer

combine economic theory with mathematical and statistical tools to analyze economic relations

question

Qualitative methods and market experiments work best for forecasting product:

answer

introduction or start-up

question

The law of diminishing returns

answer

states that the marginal product of a variable factor must eventually decline as more inputs are employed.

question

The relationship between output and a proportonate increase in all inputs is called

answer

returns to scale

question

When PX = $60, MPX = 5 and MPY = 2, relative employment levels are optimal provided

answer

PY = $24.

question

If we have a proportionate increase in output that is larger than the proportionate increase in inputs, this situation is called:

answer

increasing returns to scale

question

The total cost (TC) of producing computer software diskettes (Q) is given as: TC = 200 + 5 Q. What is the marginal cost?

answer

question

When total product (TP) reaches its maximum, then ____________

answer

marginal product equals zero.

question

The foregone value associated with the current rather than next-best use of a given asset is called

answer

opportunity cost

question

The ________ shows the maximum output that can be produced from each possible quantity of inputs

answer

production function.

question

What describes the graphical relationship between average product and marginal product?

answer

Marginal product cuts average product from above, at the maximum point of average product.

question

For the this question, assume that a given firm experiences decreasing marginal product of labor (MP) with the addition of each worker regardless of the current output level.
Refer to Scenario 1. Average total cost will be ______________

answer

U-shaped

question

If the productivity of variable factors is decreasing in the short-run:

answer

marginal cost must increase as output increases.

question

The long-run average cost curve can be thought of as a(n)

answer

envelope of short-run average cost of curves

question

The change in cost caused by a given managerial decision is

answer

incremental cost.

question

If P = $8 and MC = $5 + 0.2Q, the competitive firm's profit-maximizing level of output is

answer

question

The firm demand curve in a competitive market is

answer

horizontal

question

In the short run, a perfectly competitive firm will shut down and produce nothing if

answer

total variable cost exceeds total revenue.

question

In the long run, firms will exit a perfectly competitive industry if

answer

excess profits are less than zero.

question

In competitive market equilibrium, the firm's

answer

P = MR = AR = AC = MC

question

So long as P > AVC, the competitive firm's short-run supply curve is equal to

answer

question

The size of the subsidy (deadweight loss) of Venezuelan gasoline policy was estimated (in 2011) to be about _____% of GDP

answer

5.0.

question

The burden of a per unit tax on a product will fall primarily on producers when:

answer

demand is highly elastic with respect to price

question

Consumer sovereignty reflects

answer

buyer power.

question

Producer surplus is the

answer

amount paid to sellers above and beyond the required minimum price.

question

The welfare loss triangle depicts

answer

deadweight losses suffered by consumers and producers

question

The consumer surplus (U.S. and europe combined) for mobile/internet services in 2013 was estimated to be about

answer

$240 billions

question

Externalities are

answer

differences between social benefits and private benefits

question

The law of diminishing returns

answer

states that the marginal product of a variable factor must eventually decline as increasingly more is employed

question

Shifting a production function upward will result from the following

answer

the successful completion of a training program that enhances worker productivity.

question

When PX = $60, MPX = 5 and MPY = 2, relative employment levels are optimally provided

answer

PY = $24.

question

When PX = $100, MPX = 10 and MRQ = $5, the marginal revenue product of X equals

answer

$50

question

A production function describes the relation between output and

answer

all inputs

question

Total product divided by the number of units of variable input employed equals

answer

average product

question

When the slope of the average product curve equals zero

answer

marginal product equals average product

question

The output effect of a proportional increase in all inputs is called:

answer

returns to scale

question

Sunk costs

answer

do not vary across decision alternatives

question

When PX = $12, MPX = 1 and MPY = 2, relative employment levels are optimally provided

answer

PY = $24

question

In the short run, the

answer

availability of at least one input is fixed

question

Noncash expenses are

answer

implicit costs

question

Marginal cost equals

answer

the change in total variable cost divided by the change in quantity

question

The change in cost caused by a given managerial decision is

answer

incremental cost.

question

Costs that do not vary across decision alternatives are:

answer

sunk

question

If P = $6 and MC = $5 + 0.2Q, the competitive firm's profit-maximizing level of output is:

answer

question

In the long run, firms will offer supply at the point where P = MR = MC if:

answer

P > AC

question

For a firm in perfectly competitive market equilibrium

answer

P = MC

question

The firm demand curve in a competitive market is

answer

horizontal

question

A firm will earn normal profits when price:

answer

equals average total cost

question

In the short run, a perfectly competitive firm will shut down and produce nothing if:

answer

total variable cost exceeds total revenue

question

In competitive market equilibrium, the firm's

answer

P = MR = AR = AC = MC

question

So long as P > AVC, the competitive firm's short-run supply curve is equal to

answer

question

When profits are maximized in a competitive market, average cost is always

rising.

falling.

constant.

Correct
none of these

answer

none of these

question

In competitive market equilibrium, social welfare is measured by the

answer

sum of net benefits derived by consumers and producers.

question

No externalities exist when

answer

private costs and benefits equal social costs and benefits.

question

Failure by market structure can occur when:

answer

few buyers or sellers are present.

question

Producer surplus is the

answer

amount paid to sellers above and beyond the required minimum

question

The welfare loss triangle depicts

answer

deadweight losses suffered by consumers and producers

question

Profits stemming from market power reflect

answer

high prices

question

Externalities are

answer

differences between social benefits and private benefits.

question

Gasoline in Venezuela costs about $0.12 per gallon. This price is well ______ the prevailing world price of about $ _______ per gallon.

answer

below, $4.00

question

One estimate suggests that the gasoline policy cost Venezuela an amount equal to about ___________ % of Venezuela's GDP

answer

5.00

question

In long-run equilibrium profit maximizing outcome, monopoly prices are set a level where

answer

price exceeds marginal revenue

question

For a monopoly in equilibrium (profit maximizing outcome):

answer

MR = MC

question

In monopoly (and competitive markets), profits are maximized when

answer

MR = MC

question

A monopolist maximizes profits by producing a level of output where

answer

P > MC

question

In the short run, a monopolist will

answer

shut down if price is less than average variable cost

question

A natural monopoly exists if

answer

average cost falls as output expands

question

The Sherman Act specifically prohibits

answer

monopolizing.

question

The Celler-Kefauver Act specifically prohibits

answer

asset acquisitions that reduce competition

question

The capture theory states that

answer

some industries actively seek regulation to limit competition and obtain government subsidies.

question

A perfectly functioning cartel results in a

answer

monopoly equilibrium

question

In both monopolistic competition and oligopoly markets

answer

consumers perceive differences among the products of various competitors.

question

The demand curve faced by a firm in a monopolistically competitive industry is:

answer

downward sloping

question

An formal agreement to set prices and output is called:

answer

a cartel.

question

A 50% markup on cost is equivalent to a markup on price of

answer

33%

question

A 50% markup on price is equivalent to a markup on cost of

answer

100%

question

If a firm charges a price of $5 for a product with a cost of $2, the markup on price equals

answer

60%

question

Water pollution is a familiar type of:

answer

negative externality

question

At the socially efficient price-output level:

answer

social marginal benefit equals social marginal cost.

question

If investment in a public project makes at least one individual better off and no one worse off, the result is called

answer

Pareto satisfactory.

question

Adam Smith's belief that the pursuit of self-interest by individuals leads to social betterment is called the:

answer

invisible hand.

question

Market failure refers to a situation where

answer

Economic efficiency is not achieved.

question

Economic growth occurs when the value of aggregate output increases because of:

answer

new technology or an increased resource base that expands the economy's capacity

question

Gross Domestic Product (GDP) is the total market value of all:

answer

production during a year

question

Across countries, investment and growth rates are

answer

positively related

question

Other things equal, relatively poor countries tend to grow

answer

faster than relatively rich countries; this is called the catch-up effect

question

A. Shleifer argues that the decline in the world's inflation rate between 1980 and 2008 was a ___________ in contributing to the improvement in the world's economic performance

answer

Positive factor

1 of 144

question

The primary virtue of managerial economics lies in its

answer

usefulness

question

Business profit is

answer

the residual of sales revenue minus the explicit accounting costs of doing business

question

Value maximization is broader than profit maximization because it considers

answer

interest rates

question

Economic profit equals

answer

business profits minus implicit costs

question

The value of a firm is equal to

answer

the present value of all future cash flows.

question

The value of the firm decreases with a decrease in

answer

total revenue

question

answer

50000.

question

The breakeven level of output occurs where

answer

total profit equals zero

question

Incremental profit is

answer

the change in profit caused by a given managerial decision

question

If total revenue increases at a constant rate as output increases, marginal revenue:

answer

equals average revenue

question

Total revenue is maximized at the point where marginal

answer

revenue equals zero

question

Average cost minimization occurs at the point where

answer

MC = AC

question

A TV retailer faces the following revenue and cost relationships:

TR = $1800 Q - 0.006 Q2; MR = ____________; TC = 12100000 + 800Q + 0.004 Q2 ; MC = 800 + 0.008Q.

Find the profit maximizing price

answer

$1500.

question

High correlation among independent variables (X) leads to

answer

multicollinearity

question

Statistical analysis of economic relations focuses on the estimation and interpretation of

answer

sample statistics

question

In a uniform distribution, the mode

answer

equals the median

question

A linear model implies

answer

a constant effect of X on Y

question

If demand decreases and, at the same time, supply increases, the

answer

equilibrium price will decrease while quantity produced and sold could increase, decrease, or stay the same

question

answer

Prices will fall, but quantities exchanged will rise

question

Holding all else equal, an unnecessary increase in federally-mandated auto safety requirements leads to a decrease in

answer

auto supply

question

answer

-1.77.

question

If the price of a service goes from $90 to $80 and price elasticity of demand is around - 6.0, then total revenue (TR) must _________.

answer

rise

question

If the market price is higher than the equilibrium price a

answer

surplus exists and the market price will fall until it equals the equilibrium price and the surplus is eliminated

question

The equilibrium market price and quantity of beef (assumed to be a "normal good") would increase if

answer

consumer income increased

question

If demand and supply both increase, the

answer

quantity produced and sold will increase while the equilibrium price could increase, decrease, or remain constant

question

A multiple regression model involves two or more:

answer

independent (X) variables

question

Economic profit equals

answer

business profits minus implicit costs

question

The breakeven level of output occurs where

answer

total profit equals zero

question

If marginal cost (mc) is less than zero, then the price elasticity of demand is

answer

inelastic

question

Total revenue is maximized at the point where

answer

marginal revenue equals zero

question

Average cost minimization occurs at the point where

answer

MC = AC

question

Marginal profit equals

answer

the change in total profit following a one-unit change in output

question

High correlation among independent (X) variables leads to

answer

multicollinearity

question

In a uniform distribution, the mode

answer

equals the median

question

A linear model implies

answer

a constant effect of X on Y

question

Estimate the price impact of a 2% reduction in the world's oil supply (say, due to a supply disruption in the oil-rich Middle East). Please assume a price elasticity of demand (Ep) of oil = -0.2

answer

10%

question

The equilibrium ("market-clearing") market price of a service is the

answer

price where the quantity demanded equals the quantity supplied.

question

If the market price is higher than the equilibrium price a

answer

surplus exists and the market price will fall until it equals the equilibrium price and the surplus is eliminated

question

Suppose that the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

answer

quantity produced and sold will increase while the equilibrium price could increase, decrease, or remain constant.

question

According to the law of diminishing marginal utility

answer

as the consumption of a given product rises, the added benefit eventually diminishes.

question

answer

-6.67

question

Use the following story about cotton to answer the following question.

"The price elasticity of demand for cotton is around 0.1

answer

The quantity demanded of cotton will fall by 1%

question

answer

The quotation confuses movements along curves with shifts in curves

question

With inelastic demand, a price increase produces

answer

higher profits

question

A direct relation exists between changes in price of one product (A) and the demand for another product (B). These two products are

answer

substitutes

question

The demand for a product tends to be elastic if

answer

it has many substitutes

question

If the income elasticity of demand for a good (or service) is greater than one, the good/service is:

answer

a cyclical normal good

question

Use the following information to answer this question.

Market demand is Qd = 400 - 10 Price; Market supply is Qs = 40 + 30 Price. Find the price elasticity of demand when Price = $4.

answer

-0.11

question

If price elasticity of demand (eP ) = -3 and MC = $0.66, the profit-maximizing price is

answer

$0.99

question

With elastic demand:

answer

a given percentage increase in price causes quantity to decrease by a larger percentage

question

When marginal cost is greater than zero, the profit-maximizing point price elasticity of demand must be (measured in absolute value):

answer

greater than one

question

A forecast method based on the informed opinion of several individuals is called

answer

panel consensus

question

Growth trend analysis assumes

answer

constant percentage change over time.

question

A secular trend is the:

answer

long-run pattern of increase or decrease in a series of economic data.

question

Linear trend analysis assumes

answer

constant unit change in an important economic variable over time

question

Time-series methods

answer

use historical data as the basis for projection

question

answer

The demand curve has increased while the supply curve has increased more than the increase in demand

question

Econometric methods

answer

combine economic theory with mathematical and statistical tools to analyze economic relations

question

Qualitative methods and market experiments work best for forecasting product:

answer

introduction or start-up

question

The law of diminishing returns

answer

states that the marginal product of a variable factor must eventually decline as more inputs are employed.

question

The relationship between output and a proportonate increase in all inputs is called

answer

returns to scale

question

When PX = $60, MPX = 5 and MPY = 2, relative employment levels are optimal provided

answer

PY = $24.

question

If we have a proportionate increase in output that is larger than the proportionate increase in inputs, this situation is called:

answer

increasing returns to scale

question

The total cost (TC) of producing computer software diskettes (Q) is given as: TC = 200 + 5 Q. What is the marginal cost?

answer

question

When total product (TP) reaches its maximum, then ____________

answer

marginal product equals zero.

question

The foregone value associated with the current rather than next-best use of a given asset is called

answer

opportunity cost

question

The ________ shows the maximum output that can be produced from each possible quantity of inputs

answer

production function.

question

What describes the graphical relationship between average product and marginal product?

answer

Marginal product cuts average product from above, at the maximum point of average product.

question

answer

U-shaped

question

If the productivity of variable factors is decreasing in the short-run:

answer

marginal cost must increase as output increases.

question

The long-run average cost curve can be thought of as a(n)

answer

envelope of short-run average cost of curves

question

The change in cost caused by a given managerial decision is

answer

incremental cost.

question

If P = $8 and MC = $5 + 0.2Q, the competitive firm's profit-maximizing level of output is

answer

question

The firm demand curve in a competitive market is

answer

horizontal

question

In the short run, a perfectly competitive firm will shut down and produce nothing if

answer

total variable cost exceeds total revenue.

question

In the long run, firms will exit a perfectly competitive industry if

answer

excess profits are less than zero.

question

In competitive market equilibrium, the firm's

answer

P = MR = AR = AC = MC

question

So long as P > AVC, the competitive firm's short-run supply curve is equal to

answer

question

The size of the subsidy (deadweight loss) of Venezuelan gasoline policy was estimated (in 2011) to be about _____% of GDP

answer

5.0.

question

The burden of a per unit tax on a product will fall primarily on producers when:

answer

demand is highly elastic with respect to price

question

Consumer sovereignty reflects

answer

buyer power.

question

Producer surplus is the

answer

amount paid to sellers above and beyond the required minimum price.

question

The welfare loss triangle depicts

answer

deadweight losses suffered by consumers and producers

question

The consumer surplus (U.S. and europe combined) for mobile/internet services in 2013 was estimated to be about

answer

$240 billions

question

Externalities are

answer

differences between social benefits and private benefits

question

The law of diminishing returns

answer

states that the marginal product of a variable factor must eventually decline as increasingly more is employed

question

Shifting a production function upward will result from the following

answer

the successful completion of a training program that enhances worker productivity.

question

When PX = $60, MPX = 5 and MPY = 2, relative employment levels are optimally provided

answer

PY = $24.

question

When PX = $100, MPX = 10 and MRQ = $5, the marginal revenue product of X equals

answer

$50

question

A production function describes the relation between output and

answer

all inputs

question

Total product divided by the number of units of variable input employed equals

answer

average product

question

When the slope of the average product curve equals zero

answer

marginal product equals average product

question

The output effect of a proportional increase in all inputs is called:

answer

returns to scale

question

Sunk costs

answer

do not vary across decision alternatives

question

When PX = $12, MPX = 1 and MPY = 2, relative employment levels are optimally provided

answer

PY = $24

question

In the short run, the

answer

availability of at least one input is fixed

question

Noncash expenses are

answer

implicit costs

question

Marginal cost equals

answer

the change in total variable cost divided by the change in quantity

question

The change in cost caused by a given managerial decision is

answer

incremental cost.

question

Costs that do not vary across decision alternatives are:

answer

sunk

question

If P = $6 and MC = $5 + 0.2Q, the competitive firm's profit-maximizing level of output is:

answer

question

In the long run, firms will offer supply at the point where P = MR = MC if:

answer

P > AC

question

For a firm in perfectly competitive market equilibrium

answer

P = MC

question

The firm demand curve in a competitive market is

answer

horizontal

question

A firm will earn normal profits when price:

answer

equals average total cost

question

In the short run, a perfectly competitive firm will shut down and produce nothing if:

answer

total variable cost exceeds total revenue

question

In competitive market equilibrium, the firm's

answer

P = MR = AR = AC = MC

question

So long as P > AVC, the competitive firm's short-run supply curve is equal to

answer

question

When profits are maximized in a competitive market, average cost is always

rising.

falling.

constant.

Correct
none of these

answer

none of these

question

In competitive market equilibrium, social welfare is measured by the

answer

sum of net benefits derived by consumers and producers.

question

No externalities exist when

answer

private costs and benefits equal social costs and benefits.

question

Failure by market structure can occur when:

answer

few buyers or sellers are present.

question

Producer surplus is the

answer

amount paid to sellers above and beyond the required minimum

question

The welfare loss triangle depicts

answer

deadweight losses suffered by consumers and producers

question

Profits stemming from market power reflect

answer

high prices

question

Externalities are

answer

differences between social benefits and private benefits.

question

Gasoline in Venezuela costs about $0.12 per gallon. This price is well ______ the prevailing world price of about $ _______ per gallon.

answer

below, $4.00

question

One estimate suggests that the gasoline policy cost Venezuela an amount equal to about ___________ % of Venezuela's GDP

answer

5.00

question

In long-run equilibrium profit maximizing outcome, monopoly prices are set a level where

answer

price exceeds marginal revenue

question

For a monopoly in equilibrium (profit maximizing outcome):

answer

MR = MC

question

In monopoly (and competitive markets), profits are maximized when

answer

MR = MC

question

A monopolist maximizes profits by producing a level of output where

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P > MC

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In the short run, a monopolist will

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shut down if price is less than average variable cost

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A natural monopoly exists if

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average cost falls as output expands

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The Sherman Act specifically prohibits

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monopolizing.

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The Celler-Kefauver Act specifically prohibits

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asset acquisitions that reduce competition

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The capture theory states that

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some industries actively seek regulation to limit competition and obtain government subsidies.

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A perfectly functioning cartel results in a

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monopoly equilibrium

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In both monopolistic competition and oligopoly markets

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consumers perceive differences among the products of various competitors.

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The demand curve faced by a firm in a monopolistically competitive industry is:

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downward sloping

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An formal agreement to set prices and output is called:

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a cartel.

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A 50% markup on cost is equivalent to a markup on price of

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33%

question

A 50% markup on price is equivalent to a markup on cost of

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100%

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If a firm charges a price of $5 for a product with a cost of $2, the markup on price equals

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60%

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Water pollution is a familiar type of:

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negative externality

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At the socially efficient price-output level:

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social marginal benefit equals social marginal cost.

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If investment in a public project makes at least one individual better off and no one worse off, the result is called

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Pareto satisfactory.

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Adam Smith's belief that the pursuit of self-interest by individuals leads to social betterment is called the:

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invisible hand.

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Market failure refers to a situation where

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Economic efficiency is not achieved.

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Economic growth occurs when the value of aggregate output increases because of:

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new technology or an increased resource base that expands the economy's capacity

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Gross Domestic Product (GDP) is the total market value of all:

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production during a year

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Across countries, investment and growth rates are

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positively related

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Other things equal, relatively poor countries tend to grow

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faster than relatively rich countries; this is called the catch-up effect

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A. Shleifer argues that the decline in the world's inflation rate between 1980 and 2008 was a ___________ in contributing to the improvement in the world's economic performance

answer

Positive factor

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