question
The most important goal of the firm is to
A. maximize its revenues.
B. maximize its sales volume.
C. minimize its costs.
D. maximize its profits.
A. maximize its revenues.
B. maximize its sales volume.
C. minimize its costs.
D. maximize its profits.
answer
D. maximize its profits
question
An implicit cost is an opportunity cost that
A. is adjusted for the rate of inflation.
B. is measured by the amount of cash the firm actually pays out.
C. requires no actual payment of cash.
D. is actually part of the firm's normal profit.
A. is adjusted for the rate of inflation.
B. is measured by the amount of cash the firm actually pays out.
C. requires no actual payment of cash.
D. is actually part of the firm's normal profit.
answer
C. requires no actual payment of cash.
question
Heidi quit her job as a chef making $40,000 per year to start her own restaurant. The first year, Heidi's restaurant earned $100,000 in revenue. Heidi pays $50,000 per year in wages to the waitresses and hostess, $20,000 per year to buy food, etc. Heidi's economic profit for the year
answer
$-10,000
Her total revenue = $100,000
Her total explicit cost = $50,000 + $20,000
Her total implicit cost = $40,000
So, her total cost = $110,000
Her profit = -$10,000
Her total revenue = $100,000
Her total explicit cost = $50,000 + $20,000
Her total implicit cost = $40,000
So, her total cost = $110,000
Her profit = -$10,000
question
The owner of a proprietorship might decide to incorporate the firm as a corporation in order to
A. gain limited liability
B. be eligible for patent protection of new products
C. be able to conduct business in more than one county.
D. avoid the principal-agent problem
A. gain limited liability
B. be eligible for patent protection of new products
C. be able to conduct business in more than one county.
D. avoid the principal-agent problem
answer
A. gain limited liability
question
An example of a variable resource in the short run is
A. a building
B. land
C. capital equipment
D. an employee
A. a building
B. land
C. capital equipment
D. an employee
answer
D. an employee
question
In the above figure, after the second worker is hired, the marginal product of labor is
A. zero
B. diminishing
C. constant
D. increasing
A. zero
B. diminishing
C. constant
D. increasing
answer
B. diminishing
question
The law of diminishing marginal returns says that as the firm uses more of ________, with a given quantity of _____________, the _________ product of the variable input eventually diminishes.
answer
a variable, fixed inputs, marginal
question
When long-run average costs decrease as output increases, there are
A. economies of scale
B. constant marginal costs
C. diseconomies of scale
D. constant returns of scale
A. economies of scale
B. constant marginal costs
C. diseconomies of scale
D. constant returns of scale
answer
A. economies of scale
question
In perfect competition, restrictions on entry into an industry
A. apply to both capital and labor
B. apply to labor but not to capital
C. do not exist
D. apply to capital but not to labor
A. apply to both capital and labor
B. apply to labor but not to capital
C. do not exist
D. apply to capital but not to labor
answer
C. do not exist
question
In perfect competition, each individual firm faces ________ demand curve.
A. a downward sloping
B. a perfectly elastic
C. an inelastic
D. an upward sloping
A. a downward sloping
B. a perfectly elastic
C. an inelastic
D. an upward sloping
answer
B. a perfectly elactic
question
In perfect competition, the marginal revenue of an individual firm
A. equals the price of the product
B. exceeds the price of the product
C. is zero
D. is positive but less than the price of the product
A. equals the price of the product
B. exceeds the price of the product
C. is zero
D. is positive but less than the price of the product
answer
A. equals the price of the product
question
When Sidney's Sweaters, Inc. makes exactly zero economic profit, Sidney, the owner,
A. will boost output
B. makes an income equal to his best alternative forgone income
C. is taking a loss
D. will shut down in the short run
A. will boost output
B. makes an income equal to his best alternative forgone income
C. is taking a loss
D. will shut down in the short run
answer
B. makes an income equal to his best alternative forgone income
question
A firm will expand the amount of output it produces as long as its _______ exceeds its _______
answer
marginal revenue, marginal cost
question
In the short run, a firm will
A. produce and break even if its total revenue covered its total fixed cost but not its total variable cost
B. not produce if its total revenue does not cover its total cost
C. produce and incur an economic loss if its total revenue covered its total variable cost but not its total cost
D. produce and earn an economic profit if its total revenue was equal to its total cost
A. produce and break even if its total revenue covered its total fixed cost but not its total variable cost
B. not produce if its total revenue does not cover its total cost
C. produce and incur an economic loss if its total revenue covered its total variable cost but not its total cost
D. produce and earn an economic profit if its total revenue was equal to its total cost
answer
C. produce and incur an economic loss if its total revenue covered its total variable cost but not its total cost
question
Which of the following statements about a monopoly is FALSE?
A. The good produced by a monopoly has no close substitutes
B. Monopolies have no barriers to entry or exit
C. None of the other options are true statements about a monopoly
D. A monopoly is the only producer of the good
A. The good produced by a monopoly has no close substitutes
B. Monopolies have no barriers to entry or exit
C. None of the other options are true statements about a monopoly
D. A monopoly is the only producer of the good
answer
B. Monopolies have no barriers to entry or exit
question
A single-price monopoly charges the same price
A. at all times and that price equals the firm's marginal revenue
B. even if the demand curve shifts
C. to all customers
D. even if its cost curves shift
A. at all times and that price equals the firm's marginal revenue
B. even if the demand curve shifts
C. to all customers
D. even if its cost curves shift
answer
C. to all customers
question
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 ____________-
answer
Practicing price discrimination
question
For a single-price monopoly, marginal revenue is _______ when demand is elastic and is ________ when demand is inelastic.
answer
positive, negative
question
An unregulated monopoly will
A. produce in the elastic range of its demand curve
B. flood the market with goods to deter entry
C. produce in the inelastic range of its demand curve
D. produce only where marginal revenue is zero
A. produce in the elastic range of its demand curve
B. flood the market with goods to deter entry
C. produce in the inelastic range of its demand curve
D. produce only where marginal revenue is zero
answer
A. produce in the elastic range of its demand curve
question
A single-price monopolist will find when it produces its profit-maximizing amount of output that
A. marginal revenue equals marginal cost
B. price exceeds marginal revenue
C. price exceeds marginal cost
D. All of other options occur at the profit-maximizing output level
A. marginal revenue equals marginal cost
B. price exceeds marginal revenue
C. price exceeds marginal cost
D. All of other options occur at the profit-maximizing output level
answer
D. All of other options occur at the profit-maximizing output level
question
Using the data in the above table, the single-price profit-maximizing monopolist will produce _______ units.
answer
4
The single-price profit-maximizing monopolist produces where MR = MC, which occurs at 4 units (MR = MC = $9)
The single-price profit-maximizing monopolist produces where MR = MC, which occurs at 4 units (MR = MC = $9)
question
Using the data in the above table, the single-price profit maximizing monopolist will earn total revenue of $_____ , total cost of $_____, and total economic profit of $_______ .
Just enter value. Do not include the "$"
Just enter value. Do not include the "$"
answer
72, 49, 23 (same image as last card)
question
The fundamental reason a single-price monopoly creates a dead weight loss is that it
A. reduces the elasticity of demand
B. raises fixed cost
C. raises variable cost
D. restricts output
A. reduces the elasticity of demand
B. raises fixed cost
C. raises variable cost
D. restricts output
answer
D. restricts output
question
In the figure above, compared to a perfectly competitive industry with the same costs, a single-price, unregulated monopoly will decrease production by
answer
2
The profit-maximizing perfectly competitive firm produces where P = MC, which occurs at 6 units.
The profit-maximizing single-price monopolist firm produces where MR = MC, which occurs at 4 units.
The profit-maximizing perfectly competitive firm produces where P = MC, which occurs at 6 units.
The profit-maximizing single-price monopolist firm produces where MR = MC, which occurs at 4 units.
question
In the figure above, compared to a perfectly competitive industry with the same costs, a single-price, unregulated monopoly will raise the price by $___ per unit
answer
4
The profit-maximizing perfectly competitive firm produces where P = MC, which occurs at 6 units and charges $6.
The profit-maximizing single-price monopolist firm produces where MR = MC, which occurs at 4 units and charges $10.
The profit-maximizing perfectly competitive firm produces where P = MC, which occurs at 6 units and charges $6.
The profit-maximizing single-price monopolist firm produces where MR = MC, which occurs at 4 units and charges $10.
question
In comparison with a perfect competition, a single-price monopolist with the same costs creates a ________ consumer surplus and earns a ______ economic profit.
answer
smaller, larger
question
Which of the following is characteristic of oligopoly, but NOT of monopolistic competition?
A. The choices made by one firm have a significant effect on other firms.
B. Each firm faces a downward-sloping demand curve
C. There is more than one firm in the industry
D. Firms are profit-maximizers
A. The choices made by one firm have a significant effect on other firms.
B. Each firm faces a downward-sloping demand curve
C. There is more than one firm in the industry
D. Firms are profit-maximizers
answer
A. The choices made by one firm have a significant effect on other firms.
question
The table above displays the possible outcomes for Bob and Joe, who have been arrested for armed robbery and car theft. Which of the following is true?
A. If Joe does not confess, Bob should not confess
B. If Bob confesses, Joe should confess
C. The dominant equilibrium is that Joe and Bob both serve 2 years
D. If Joe confesses, Bob should not confess
A. If Joe does not confess, Bob should not confess
B. If Bob confesses, Joe should confess
C. The dominant equilibrium is that Joe and Bob both serve 2 years
D. If Joe confesses, Bob should not confess
answer
B. If Bob confesses, Joe should confess
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