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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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