econ final (new material) - Assignment Essays

Q: If a firm is producing where MR < MC,

the revenue gained by producing one more unit of output is less than the cost incurred by doing so.

Q: A perfectly competitive firm's supply curve is its

marginal cost curve above its minimum average variable cost.

Q: When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell

nothing at all; the firm shuts down.

question

If the firm can vary all factors of production, it is operating

answer

in the long run

question

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 63 cookies together. What is the marginal product of the 3rd worker?

answer

question

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 63 cookies together. What is the average product of the three workers?

answer

question

A positive, but decreasing, value for the marginal product would indicate that

answer

total output is increasing at a decreasing rate

question

When total product is decreasing,

answer

marginal product must be negative.

question

If we add successive laborers to work a given amount of land on a wheat farm, eventually

answer

the increases in wheat harvested will get smaller and smaller.

question

Suppose that when the level of output for the firm increases from 100 to 110 units, its variable costs increase from $500 to $750. What is the firm's marginal cost?

answer

$25

question

Which one of the following is FALSE?

answer

MC = TC divided by Q

question

Assume it takes 10 units of labor to produce 4 units of output. When the price of labor is $6 per unit (of labor) and fixed costs equal $65, what is the total cost of those 4 units of output? (Assume that labor cost is the only variable cost)

answer

$125

question

When output is 100 units, the firm's total fixed cost is $1,000. What will this firm's total fixed cost be if output doubles to 200 units?

answer

$1,000

question

As a firm decreases the level of output that it produces, short-run average fixed cost

answer

rises

question

When Super Stuff Corporation produces 5,000 units, total costs equal $150,000 and total variable costs equal $70,000. At this level of output, what is Super Stuff's average fixed cost?

answer

$16

question

Suppose a firm doubles its output in the long run. At the same time the unit cost of production remains unchanged. We can conclude that the firm is

answer

facing constant returns to scale

question

If a firm's demand curve is perfectly elastic, then at the profit maximizing level of output

answer

P = MR = MC.

question

If a firm is producing where MR < MC,

answer

the revenue gained by producing one more unit of output is less than the cost incurred by doing so.

question

A firm in a perfectly competitive industry is producing 55 units, its profit-maximizing quantity. Industry price is $2, total fixed costs are $25, and total variable costs are $40. The firm's economic profit is

answer

$45

question

Wheat is produced in a perfectly competitive market. Market demand for wheat decreases. This will cause the individual wheat farmer's marginal revenue to ________ and their profit maximizing level of output to ________.

answer

decrease; decrease

question

Strawberries, a normal good, are produced in a perfectly competitive market. Average consumer incomes increase. This will cause the individual strawberry farmer's marginal revenue to ________ and their profit maximizing level of output to ________.

answer

increase; increase

question

A perfectly competitive firm's supply curve is its

answer

marginal cost curve above its minimum average variable cost.

question

When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell

answer

nothing at all; the firm shuts down.

question

A monopoly is an industry with

answer

a single firm in which the entry of new firms is blocked.

question

Ben's Peanut Shoppe suffers a short-run loss. Ben will not choose to shut down if

answer

his Shoppe's total revenue exceeds his variable cost.

question

If a typical firm in a perfectly competitive industry is incurring losses, then

answer

some firms will exit in the long run, causing market supply to decrease and market price to rise increasing profits for the remaining firms.

question

Although patents are a ________, they also provide ________.

answer

barrier to entry; an incentive for invention and innovation

question

In the long run, a firm in a perfectly competitive industry will supply output only if its total revenue covers its

answer

explicit costs plus its implicit costs.

question

One of the requirements for a monopoly is that

answer

there is a product with no close substitutes.

question

Which of the following describes a barrier to entry?

answer

anything that protects a firm from the arrival of new competitors

question

Mylan Pharmaceuticals holds a patent on the EpiPen - designed to inject epinephrine into shock victims. In 2016, Mylan received criticism for charging $600 for this life-saving drug. The market for EpiPens is considered ________ which means that the price of an Epipen ________ its marginal cost.

answer

a monopoly; is greater than

question

Mylan Pharmaceuticals holds a patent on the EpiPen - designed to inject epinephrine into shock victims. In 2016, Mylan received criticism for charging $600 for this life-saving drug. Mylan's patent is a ________ Mylan to charge a price ________.

answer

legal barrier to entry and allows; greater than marginal cost

question

Which one of the following about a monopoly is false?

answer

A monopoly must have some kind of government privilege or government-imposed barrier to maintain its monopoly.

1 of 30

question

If the firm can vary all factors of production, it is operating

answer

in the long run

question

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 63 cookies together. What is the marginal product of the 3rd worker?

answer

question

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 63 cookies together. What is the average product of the three workers?

answer

question

A positive, but decreasing, value for the marginal product would indicate that

answer

total output is increasing at a decreasing rate

question

When total product is decreasing,

answer

marginal product must be negative.

question

If we add successive laborers to work a given amount of land on a wheat farm, eventually

answer

the increases in wheat harvested will get smaller and smaller.

question

Suppose that when the level of output for the firm increases from 100 to 110 units, its variable costs increase from $500 to $750. What is the firm's marginal cost?

answer

$25

question

Which one of the following is FALSE?

answer

MC = TC divided by Q

question

answer

$125

question

When output is 100 units, the firm's total fixed cost is $1,000. What will this firm's total fixed cost be if output doubles to 200 units?

answer

$1,000

question

As a firm decreases the level of output that it produces, short-run average fixed cost

answer

rises

question

When Super Stuff Corporation produces 5,000 units, total costs equal $150,000 and total variable costs equal $70,000. At this level of output, what is Super Stuff's average fixed cost?

answer

$16

question

Suppose a firm doubles its output in the long run. At the same time the unit cost of production remains unchanged. We can conclude that the firm is

answer

facing constant returns to scale

question

If a firm's demand curve is perfectly elastic, then at the profit maximizing level of output

answer

P = MR = MC.

question

If a firm is producing where MR < MC,

answer

the revenue gained by producing one more unit of output is less than the cost incurred by doing so.

question

answer

$45

question

answer

decrease; decrease

question

answer

increase; increase

question

A perfectly competitive firm's supply curve is its

answer

marginal cost curve above its minimum average variable cost.

question

When a perfectly competitive firm finds that its market price is below its minimum average variable cost, it will sell

answer

nothing at all; the firm shuts down.

question

A monopoly is an industry with

answer

a single firm in which the entry of new firms is blocked.

question

Ben's Peanut Shoppe suffers a short-run loss. Ben will not choose to shut down if

answer

his Shoppe's total revenue exceeds his variable cost.

question

If a typical firm in a perfectly competitive industry is incurring losses, then

answer

some firms will exit in the long run, causing market supply to decrease and market price to rise increasing profits for the remaining firms.

question

Although patents are a ________, they also provide ________.

answer

barrier to entry; an incentive for invention and innovation

question

In the long run, a firm in a perfectly competitive industry will supply output only if its total revenue covers its

answer

explicit costs plus its implicit costs.

question

One of the requirements for a monopoly is that

answer

there is a product with no close substitutes.

question

Which of the following describes a barrier to entry?

answer

anything that protects a firm from the arrival of new competitors

question

answer

a monopoly; is greater than

question

Mylan Pharmaceuticals holds a patent on the EpiPen - designed to inject epinephrine into shock victims. In 2016, Mylan received criticism for charging $600 for this life-saving drug. Mylan's patent is a ________ Mylan to charge a price ________.

answer

legal barrier to entry and allows; greater than marginal cost

question

Which one of the following about a monopoly is false?

answer

A monopoly must have some kind of government privilege or government-imposed barrier to maintain its monopoly.

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