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The most important goal of the firm is to
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maximize its profits
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An implicit cost is an opportunity cost that
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requires no actual payment of cash
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The owner of a proprietorship might decide to incorporate the firm as a corporation in order to
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gain limited liability
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An example of a variable resource in the short run is
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an employee
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the law of diminishing marginal return states that as the firm uses more of ___________, with a given quantity of ___________, the _____________ product of the variable input eventually diminishes.
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Variable, fixed inputs, marginal
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When long-run average costs decrease as output increases, there are
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economies of scale
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In perfect competition, each individual firm faces _______________ demand curve.
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a perfectly elastic
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In perfect competition, restrictions on entry into an industry
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do not exist
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In perfect competition, the marginal revenue of an individual firm
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equals the price of the product
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When Sidney's Sweaters, Inc. makes exactly zero economic profit, Sidney, the owner,
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makes an income equal to his best alternative forgone income
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A firm will expand the amount of output it produces as long as its
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marginal revenue exceeds its marginal cost
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In a short run, the firm will
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not produce if its total revenue does not cover its total cost
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Which of the following statements about a monopoly is false?
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Monopolies have no barriers to entry or exit
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A single-price monopoly changes the price to
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all customers
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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...
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practicing price discrimination
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For a single-price monopoly, marginal _________ is positive when demand is elastic and is ____________ when demand is inelastic.
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positive, negative
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An unregulated monopoly will
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produce in the elastic range of its demand curve
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A single price monopolist will find when it produces its profit-maximizing amount of output that
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All of the other options occur at the profit-maximizing output level
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The fundamental reason a single-price monopoly creates a deadweight loss is that it
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restricts output
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In comparison with a perfect competition, a single-price monopolist with the same costs creates a ___________ consumer surplus and earns a ___________ economic profit.
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smaller, larger
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Which of the following is characteristic of oligopoly, but NOT of monopolistic competition
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The choices made by one firm have a significant effect on other firms
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