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Marginal Revenue

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The change in total revenue that results from a 1-unit increase in the quantity sold

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Marginal Revenue measures:

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- The change in total revenue resulting from a 1 unit change in output

-The difference between the revenue gained from increasing output by 1 unit and the revenue lost from the resulting lower price

- The slope of the total revenue curve.

-The difference between the revenue gained from increasing output by 1 unit and the revenue lost from the resulting lower price

- The slope of the total revenue curve.

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If the price elasticity is 1.74 and the price of a good increases from $10 to $12, we would expect total revenue to:

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Decrease- if the good is price elastic and its price goes up, total revenue decreases

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When a perfectly competitive firm maximizes profits, it is :

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-making a production decision

-maximizing the difference between total revenue (TR) and total cost (TC)

-finding the production level at which its marginal revenue equals its marginal cost above average variable costs ( AVC)

-maximizing the difference between total revenue (TR) and total cost (TC)

-finding the production level at which its marginal revenue equals its marginal cost above average variable costs ( AVC)

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The fact that a perfectly competitive firms total revenue curve is an upward sloping straight line implies that

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product price is constant at all levels

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Total Revenue for the competitive firm is equal :

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- P x Q

- economic cost + economic profit

- MR x Q

- economic cost + economic profit

- MR x Q

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Marginal Cost

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The change in total cost that results from a 1-unit increase in production

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In a perfectly competitive market in the long run:

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- firms are attempting to maximize profit

- economic profits are zero

- there are no better uses for the firms resources

- economic profits are zero

- there are no better uses for the firms resources

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Assume that a firm is producing at its profit -maximizing levels level of output. A decrease in fixed cost implies that:

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Neither marginal revenue (MR) nor Marginal cost will change

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The demand for a product is given by P=1,800-20Q. If the firm wishes to sell 70 units , each unit should be priced at :

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$400

P= 1800-20(70)

P= 1800-20(70)

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A firm can sell as much output as it wishes at the fixed price, P=$10 per unit. Then,

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Marginal revenue is constant and equal to $10

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A demand function has been estimated to be

Qx=550-5Px+1.5Py-2Y. Based on this information we can conclude that:

Qx=550-5Px+1.5Py-2Y. Based on this information we can conclude that:

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Product X us an inferior good

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Product y ( py) is a substitute good

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Product y ( py) is a substitute good

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A response bias occurs when:

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responses do not reflect the true preferences and attitudes of the respondent

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Dummy Variables

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used to correct for seasonality in time series

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What is true of the t-statistic ?

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It tells us how many standard errors that coefficient estimate is from the value of zero

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Computing the F statistic allows one to :

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test the overall statistical significance of the regression equation

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A regression coefficient measures:

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the change in the dependent variable due to a unit change in a particular independent variable

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A good that has highly elastic demand is most likely to:

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have a large number of substitute

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Assume the arc price elasticity of demand for movie tickets is 1.6. If the price per ticket increase from $7.5 to 8.5, then using mid point percent formula the number of tickets demanded will

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decrease by 20 percent

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midpoint percent formula

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84

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Assuming that marginal cost is $60, and the price elasticity is demand -3.5, what is the optimal price a seller should charge to maximize profit ?

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marginal costs are unchanged

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In general, if the price or cost of fixed factor of production increases,

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Q=cL^.2 K^.5

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Which of the following production functions displays decreasing returns to scale?

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When one input is increased, with all the other imputs unchanged , the marginal product of the input will eventually decline

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law of diminishing returns states :

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marginal revenue stay the same, marginal revenues fall

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If a perfect competitor sells additional units, ____________, and if a monopolist sells additional units _______________

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a firm will always produce where price equals MC, and where price equals ATC only in the long run

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True in a competitive market

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