the most important goal of the firm is to:
a) minimize its costs
b) maximize its profits
c) maximize its revenues
d) maximize its sales volume
an implicit cost is an opportunity cost that
a) is actually part of the firm's normal profit
b) is measured by the amount of cash the firm actually pays out
c) is adjusted for the rate of inflation
d) requires no actual payment of cash
-10,000
Her total revenue = $100,000
Her total explict cost = $50,000 + $20,000
Her total implicit cost = $40,000
Her total cost = $110,000
Her profit = -$10,000
the owner of a proprietorship might decide incorporate the firm as a corporation in order to
a) avoid the principal-agent problem
b) be eligible for patent protection of new products
c) gain limited liability
d) be able to conduct business in more than one country
an example of a variable resource in the short run is
a) land
b) a building
c) an employee
d) capital equipment
In the above figure, after the second worker is hired, the marginal product of labor is
a) increasing
b) zero
c) diminishing
d) constant
a variable
fixed inputs
marginal
when long-run average costs decrease as output increases, there are
a) constant returns to scale
b) economies of scale
c) constant marginal costs
d) diseconomies of scale
in perfect competition, restrictions on entry into an industry
a) apply to capital but not to labor
b) apply to labor but not to capital
c) do not exist
d) apply to both capital and labor
in perfect competition, each individual firm faces ____ demand curve
a) an inelastic
b) man upward sloping
c) a perfectly elastic
d) a downward sloping
in perfect competition, the marginal revenue of an individual firm
a) equals the price of the product
b) is zero
c) exceeds the price of the product
d) is positive but less than the price of the product
when Sidney's Sweaters, Inc. makes exactly zero economic profit, Sidney, the owner,
a) makes an income equal to his best alternative forgone income
b) will shut down in the short run
c) will boost output
d) is taking a loss
marginal revenue
marginal cost
in the short run, a firm will
a) not produce if its total revenue does not cover its total cost
b) produce and earn an economic profit if its total revenue was equal to its total cost
c) produce and incur an economic loss of its total revenue covered its total variable cost but not its total cost
d) produce and break even if its total revenue covered its total fixed cost but not its total variable cost
which of the following statements about a monopoly is false?
a) the good produced by a monopoly has no close substitutes
b) monopolies have no barriers to entry or exit
c) none of the other options are true statements about a monopoly
d) a monopoly is the only producer of the good
a single-price monopoly charges the same price
a) even if the demand curve shifts
b) even if its cost curves shift
c) to all customers
d) at all times and that price equals the firm's marginal revenue
When Dominant Pizza is willing to sell a pizza to a student who lives on-campus at a lower price than it is willing to sell the identical pizza to a student who lives a block away from the campus, the pizza firm is __________ _________ _______________.
positive
negative
an unregulated monopoly will
a) flood the market with goods to deter entry
b) produce only where marginal revenue is zero
c) produce in the inelastic range of its demand curve
d) produce in the elastic range of its demand curve
a single-price monopolist will find when it produces its profit-maximizing amount of output that
a) price exceeds marginal cost
b) all of other options occur at the profit-maximizing output level
c) price exceeds marginal revenue
d) marginal revenue equals marginal cost
the fundamental reason a single-price monopoly creates a deadweight loss is that it
a) restricts output
b) raises variable cost
c) reduces the elasticity of demand
d) raises fixed cost
smaller
larger
enter
falls
increases
in the long run, a monopolistically competitive firm's price equals
a) its average total cost but not its marginal cost
b) its average total cost and its marginal cost
c) its marginal cost but not its average total cost
d) neither marginal cost nor its average total cost
if a monopolistically competitive firm's marginal cost curve shifts upward (left), then the amount of output it produces
a) could increase, decrease, or stay the same
b) decreases
c) stays the same
d) increases
which of the following is a characteristic of oligopoly, but not of monopolistic competition
a) there is more than one firm in the industry
b) firms are profit-maximizers
c) the choices made by one firm have a significant effect on other firms
d) each firm faces a downward sloping demand curve
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