ECON Chapter 4 Terms - Assignment Essays

question

Which of the following has limited liability?

answer

Corporation

question

When two firms that serve the same set of customers merge it is called a _______ merger.

answer

Horizontal

question

Which of the following is a basic income statement?

answer

Revenues - Costs = Profits

question

Total revenue can be found by:

answer

Both

question

Which of the following is tru? marginal revenue:

answer

Is the additional revenue received when the firm sells one more unit of the product

question

In the short run, the firm cannot change the amount of capital it uses. Therefore, the cost of capital is a:

answer

Fixed Cost

question

Because the number of workers a firm employs can be changed in the short run, the cost of labor is a:

answer

Variable cost

question

If a firm does not produce any output, its:

answer

Variable costs must be zero

question

The marginal cost curve will pass upward through the minimum point of the:

answer

Only options a. And b; not option c.

question

ATC is always _________ than ________.

answer

Higher; AVC

question

The production model, consisting of the AFC, AVC, ATC, and MC curves, applies:

answer

Equally to small businesses and gigantic firms

question

On the production cost curve graph, we see that the:

answer

MC curve intersects the ATC curve and the AVC curve at their minimums

question

The opportunity costs of the owner's assets, time, and effort are:

answer

Implicit costs

question

Another name for implicit costs is:

answer

Normal profit

question

Accounting profit is calculated by:

answer

TR -explicit costs

question

Economic profit is calculated by:

answer

TR - (explicit + implicit costs)

question

The minimum return on investment necessary for the owner to continue to operate the
business is called:

answer

Normal profit

question

Joan quit her job as an accountant, where she was paid $45,000 per year. She started her own business. She rents tools and machines for $50,000 per year and pays a helper $10,000 per year in wages. These are her only costs. Her total revenue was $100,000 per year.

answer

Both options a. And b. ( Her accounting profit is $40,000 & She has an economic loss )

question

If the economic profit is exactly equal to zero:

answer

The owner is making exactly a normal profit

question

If economic profit is less than zero:

answer

The owner may consider shutting down

question

When economic profits are _________ zero, an industry will expand until economic profits
_____________.

answer

Greater than; fall to zero

question

The primary driving factor that leads to industry expansion is:

answer

High customer demand

question

When an industry expands:

answer

Prices fall as the supply curve shifts right

question

When an industry shrinks:

answer

Prices rise as the supply curve shifts left

question

The profit-maximizing quantity to produce can be found where:

answer

MR = MC

question

In which market structure do firms exist in very large numbers, each firm produces an
identical product, and there is freedom of entry and exit?

answer

Perfect competition

question

A monopoly occurs when:

answer

One firm only sells a good having no close substitutes and a barrier blocks entry for other firms

question

_______________ arises when a large number of firms compete by making constant
variations and improvements to similar products.

answer

Monopolistic competition

question

______________ arises when a small number of firms emerge out of ____________.

answer

Oligopoly; monopolistic competition

question

A firm maximizes its profit by producing the quantity that marginal:

answer

Revenue equals marginal cost

question

Mark makes and sells dune buggies. At his current output, MR exceeds MC. In order to maximize his profit, Mark should:

answer

Increase his output

question

If a firm's ATC msg reader than the price, then the firm:

answer

Has an economic loss

question

Catfish farming is an industry in perfect competition. The industry suffered large economic losses in 1999. As a result:

answer

Some catfish farmers exited the industry

question

A monopoly will arise if:

answer

Town council passes a law granting Joe's Pizza exclusive right to operate

question

Movie theaters often practice price discrimination. This means that movies charge:

answer

Different prices to different customers

question

Compared to perfect competition, a monopolist will produce:

answer

Less output and charge a higher price

question

As a new industry expands:

answer

Options a. And b.

question

Market power is defined as a firm's ability to:

answer

Manipulate the market price

question

All of the following are barriers to entry except:

answer

Extraordinarily high price of the product

question

Most monopolies today are:

answer

Found in government-regulated industries

question

Product innovation is more likely to be found in a ______________ industry.

answer

Monopolistic competition

question

Economic profits do not last long in monopolistic competition industries because:

answer

Any new innovation is quickly "clones" by competitors

question

The ultimate result of industry expansion in monopolistic competition is:

answer

The creation of an oligopoly

question

Which of the following is a characteristic of oligopoly?

answer

Market share is sometimes more important than profit maximization

question

An industry goes into decline when:

answer

ITs product no longer best satisfies the consumers' wants and needs

question

A firm achieves economies of scale if expanding:

answer

Lowers per unit costs

question

All of the following help to achieve economies of scale except:

answer

Expanding the supervisory work force

question

The ideal sized facility is one that:

answer

Achieves all economies of scale

1 of 48

question

Which of the following has limited liability?

answer

Corporation

question

When two firms that serve the same set of customers merge it is called a _______ merger.

answer

Horizontal

question

Which of the following is a basic income statement?

answer

Revenues - Costs = Profits

question

Total revenue can be found by:

answer

Both

question

Which of the following is tru? marginal revenue:

answer

Is the additional revenue received when the firm sells one more unit of the product

question

In the short run, the firm cannot change the amount of capital it uses. Therefore, the cost of capital is a:

answer

Fixed Cost

question

Because the number of workers a firm employs can be changed in the short run, the cost of labor is a:

answer

Variable cost

question

If a firm does not produce any output, its:

answer

Variable costs must be zero

question

The marginal cost curve will pass upward through the minimum point of the:

answer

Only options a. And b; not option c.

question

ATC is always _________ than ________.

answer

Higher; AVC

question

The production model, consisting of the AFC, AVC, ATC, and MC curves, applies:

answer

Equally to small businesses and gigantic firms

question

On the production cost curve graph, we see that the:

answer

MC curve intersects the ATC curve and the AVC curve at their minimums

question

The opportunity costs of the owner's assets, time, and effort are:

answer

Implicit costs

question

Another name for implicit costs is:

answer

Normal profit

question

Accounting profit is calculated by:

answer

TR -explicit costs

question

Economic profit is calculated by:

answer

TR - (explicit + implicit costs)

question

The minimum return on investment necessary for the owner to continue to operate the
business is called:

answer

Normal profit

question

answer

Both options a. And b. ( Her accounting profit is $40,000 & She has an economic loss )

question

If the economic profit is exactly equal to zero:

answer

The owner is making exactly a normal profit

question

If economic profit is less than zero:

answer

The owner may consider shutting down

question

When economic profits are _________ zero, an industry will expand until economic profits
_____________.

answer

Greater than; fall to zero

question

The primary driving factor that leads to industry expansion is:

answer

High customer demand

question

When an industry expands:

answer

Prices fall as the supply curve shifts right

question

When an industry shrinks:

answer

Prices rise as the supply curve shifts left

question

The profit-maximizing quantity to produce can be found where:

answer

MR = MC

question

In which market structure do firms exist in very large numbers, each firm produces an
identical product, and there is freedom of entry and exit?

answer

Perfect competition

question

A monopoly occurs when:

answer

One firm only sells a good having no close substitutes and a barrier blocks entry for other firms

question

_______________ arises when a large number of firms compete by making constant
variations and improvements to similar products.

answer

Monopolistic competition

question

______________ arises when a small number of firms emerge out of ____________.

answer

Oligopoly; monopolistic competition

question

A firm maximizes its profit by producing the quantity that marginal:

answer

Revenue equals marginal cost

question

Mark makes and sells dune buggies. At his current output, MR exceeds MC. In order to maximize his profit, Mark should:

answer

Increase his output

question

If a firm's ATC msg reader than the price, then the firm:

answer

Has an economic loss

question

Catfish farming is an industry in perfect competition. The industry suffered large economic losses in 1999. As a result:

answer

Some catfish farmers exited the industry

question

A monopoly will arise if:

answer

Town council passes a law granting Joe's Pizza exclusive right to operate

question

Movie theaters often practice price discrimination. This means that movies charge:

answer

Different prices to different customers

question

Compared to perfect competition, a monopolist will produce:

answer

Less output and charge a higher price

question

As a new industry expands:

answer

Options a. And b.

question

Market power is defined as a firm's ability to:

answer

Manipulate the market price

question

All of the following are barriers to entry except:

answer

Extraordinarily high price of the product

question

Most monopolies today are:

answer

Found in government-regulated industries

question

Product innovation is more likely to be found in a ______________ industry.

answer

Monopolistic competition

question

Economic profits do not last long in monopolistic competition industries because:

answer

Any new innovation is quickly "clones" by competitors

question

The ultimate result of industry expansion in monopolistic competition is:

answer

The creation of an oligopoly

question

Which of the following is a characteristic of oligopoly?

answer

Market share is sometimes more important than profit maximization

question

An industry goes into decline when:

answer

ITs product no longer best satisfies the consumers' wants and needs

question

A firm achieves economies of scale if expanding:

answer

Lowers per unit costs

question

All of the following help to achieve economies of scale except:

answer

Expanding the supervisory work force

question

The ideal sized facility is one that:

answer

Achieves all economies of scale

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