Economics: Chapter 7-10 Quiz - Assignment Essays

question

Which of the following is true of a perfectly competitive firm?

answer

The firm will not earn an economic profit in the long run.

question

Profit is maximized when which of the following conditions occur?

answer

Marginal revenue equals marginal cost.

question

A perfectly competitive firm sells its output for $100 per unit and marginal cost is $100 per unit. To maximize short-run profit, the firm should:

answer

Maintain its current output

question

The profit maximizing, or loss minimizing quantity of output for any firm to produce exists at that output level in which

answer

Marginal revenue equals marginal cost

question

Under perfect competition, a business firm can accept losses

answer

Only in the short run

question

If ABC Printing is producing an output level of 100, where MR is $5 and MC is $3, then the firm is

answer

Making an unknown amount of profit or loss

question

Consider a firm with the following cost and revenue information: ATC = $8, AVC = $7, and MR = MC = $6. If the firm produces Q = 60 in the short run, it:

answer

Is making a mistake and should shut down

question

If a firm is operating at a loss in the short run and finds that its price is greater than average variable cost, then in the short run:

answer

It should produce where MR = MC

question

Which of the following statements are false?

answer

B and D
Marginal cost is always rising
The AFC and AVC curves do not cross

question

Suppose that 1000 identical sellers each set their profit-maximizing output level at 18 units when price equals $10. Then what is market quantity supplied at a price of $10.

answer

18,000

question

The supply surve of a price-taker firm in the short run is the:

answer

Portion of the firm's marginal cost curve that lies above average variable cost curve

question

In Exhibit 4, this firm is currently operating at its profit-maximizing level of output. How much profit is the firm earning?

answer

Unable to determine with this information

question

If the firm in Exhibit 7-14 minimizes its loss at 200 units of output, marginal cost is:

answer

Equal to marginal revenue

question

In a perfectly competitive industry, assume the short-run average total cost increases as the output of the industry expands. In the long run, the industry supply curve will:

answer

Have a positive slope

question

Which of the following is true for a pure monopolist?

answer

The demand curve is above the marginal revenue curve

question

There is only one gas station within hundreds of miles. The owner finds that when she charges $3 a gallon, she sells 199 gallons a day, and when she charges $2.99 a gallon, she sells 200 gallons a day. The marginal revenue of the 200th gallon of gas is:

answer

question

Refer to Exhibit 8-2. Using the rule that focuses on the marginal approach to maximizing profits, the monopolist maximizes profit by choosing price equal to:

answer

$20

question

A monopolist will maximize profits by:

answer

Producing the output where marginal revenue equals marginal cost

question

A monopoly firm can sell its fourth unit of output for a price of $250. In order to sell more than five units, it must expect to receive a price:

answer

Less than $250

question

Price discrimination requires:

answer

A firm to be able to segment its customers based on different price elasticities of demand

question

Price discrimination occurs when:

answer

A seller charges different prices to different consumers for the same product or service

question

An example of price discrimination is the price charged for:

answer

Theater tickets that offer lower prices for children

question

Under both perfect competition and monopoly, a firm:

answer

Maximizes profit by setting marginal cost equal to marginal revenue

question

A picture frame company operates in a monopolistically competitive market. Its short-run equilibrium price is $80 and its ATC is $65. It sells 100 picture frames a week. From this we can tell:

answer

Economic profits are $1,500

question

In the long run, the demand curve for the monopolistic competitive firm shown in Exhibit 9-1:

answer

Shifts leftward

question

In an oligopoly industry, price

answer

Cannot be predicted exactly, because it is likely to lie between the competitive and monopoly prices

question

Suppose an oil cartel has an agreement to restrict members' production in order to maintain a price of $30 per barrel. A single cartel member may want to cheat and exceed its quota so that it can:

answer

Earn a bigger profit

question

The purpose of a cartel is to:

answer

Act like a monopoly

question

Which of the following is a distinction between perfectly competitive and monopolistic competition?

answer

Perfectly competitive firms must compete with rival sellers; monopolistically competitive firms do not confront rival sellers

question

Some economists argue that monopolistically competitive markets are inefficient because:

answer

Firms do not produce the output rate that would minimize their average total cost

question

Marginal revenue product is defined as the extra:

answer

Revenue earned by hiring one more unit of resource

question

If product price increases, then:

answer

MRP will increase

question

Which of the following statements is true?

answer

a. Derived demand for labor depends on the demand for the product labor produces.
b. Unions can either increase demand or decrease the supply of labor.
c. Investment in human capital is expected to increase the demand for those workers.
ALL OF THE ABOVE!!!

question

In Exhibit 10-3, suppose that in the interest of boosting incomes of the working poor, Congress imposes a minimum wage of $6.00 per hour. This minimum wage creates a(n):

answer

Excess supply of labor of food servers

question

What happens to the MP of labor when the market price of the good produced increases?

answer

Stays the same

question

Currently, union membership in the United States is about:

answer

15 percent

question

Of the following demographic groups, which has the lowest poverty rate in the U.S.?

answer

Families in which the "head of the household" has attained at least a bachelor's degree from a college or university

question

The social security tax is called FICA, which stands for:

answer

Federal Insurance Contributions Act

question

Which of the following statements is correct?

answer

About 25 percent of the U.S. population earns an income below the poverty line.

1 of 39

question

Which of the following is true of a perfectly competitive firm?

answer

The firm will not earn an economic profit in the long run.

question

Profit is maximized when which of the following conditions occur?

answer

Marginal revenue equals marginal cost.

question

A perfectly competitive firm sells its output for $100 per unit and marginal cost is $100 per unit. To maximize short-run profit, the firm should:

answer

Maintain its current output

question

The profit maximizing, or loss minimizing quantity of output for any firm to produce exists at that output level in which

answer

Marginal revenue equals marginal cost

question

Under perfect competition, a business firm can accept losses

answer

Only in the short run

question

If ABC Printing is producing an output level of 100, where MR is $5 and MC is $3, then the firm is

answer

Making an unknown amount of profit or loss

question

Consider a firm with the following cost and revenue information: ATC = $8, AVC = $7, and MR = MC = $6. If the firm produces Q = 60 in the short run, it:

answer

Is making a mistake and should shut down

question

If a firm is operating at a loss in the short run and finds that its price is greater than average variable cost, then in the short run:

answer

It should produce where MR = MC

question

Which of the following statements are false?

answer

B and D
Marginal cost is always rising
The AFC and AVC curves do not cross

question

Suppose that 1000 identical sellers each set their profit-maximizing output level at 18 units when price equals $10. Then what is market quantity supplied at a price of $10.

answer

18,000

question

The supply surve of a price-taker firm in the short run is the:

answer

Portion of the firm's marginal cost curve that lies above average variable cost curve

question

In Exhibit 4, this firm is currently operating at its profit-maximizing level of output. How much profit is the firm earning?

answer

Unable to determine with this information

question

If the firm in Exhibit 7-14 minimizes its loss at 200 units of output, marginal cost is:

answer

Equal to marginal revenue

question

In a perfectly competitive industry, assume the short-run average total cost increases as the output of the industry expands. In the long run, the industry supply curve will:

answer

Have a positive slope

question

Which of the following is true for a pure monopolist?

answer

The demand curve is above the marginal revenue curve

question

answer

question

Refer to Exhibit 8-2. Using the rule that focuses on the marginal approach to maximizing profits, the monopolist maximizes profit by choosing price equal to:

answer

$20

question

A monopolist will maximize profits by:

answer

Producing the output where marginal revenue equals marginal cost

question

A monopoly firm can sell its fourth unit of output for a price of $250. In order to sell more than five units, it must expect to receive a price:

answer

Less than $250

question

Price discrimination requires:

answer

A firm to be able to segment its customers based on different price elasticities of demand

question

Price discrimination occurs when:

answer

A seller charges different prices to different consumers for the same product or service

question

An example of price discrimination is the price charged for:

answer

Theater tickets that offer lower prices for children

question

Under both perfect competition and monopoly, a firm:

answer

Maximizes profit by setting marginal cost equal to marginal revenue

question

A picture frame company operates in a monopolistically competitive market. Its short-run equilibrium price is $80 and its ATC is $65. It sells 100 picture frames a week. From this we can tell:

answer

Economic profits are $1,500

question

In the long run, the demand curve for the monopolistic competitive firm shown in Exhibit 9-1:

answer

Shifts leftward

question

In an oligopoly industry, price

answer

Cannot be predicted exactly, because it is likely to lie between the competitive and monopoly prices

question

Suppose an oil cartel has an agreement to restrict members' production in order to maintain a price of $30 per barrel. A single cartel member may want to cheat and exceed its quota so that it can:

answer

Earn a bigger profit

question

The purpose of a cartel is to:

answer

Act like a monopoly

question

Which of the following is a distinction between perfectly competitive and monopolistic competition?

answer

Perfectly competitive firms must compete with rival sellers; monopolistically competitive firms do not confront rival sellers

question

Some economists argue that monopolistically competitive markets are inefficient because:

answer

Firms do not produce the output rate that would minimize their average total cost

question

Marginal revenue product is defined as the extra:

answer

Revenue earned by hiring one more unit of resource

question

If product price increases, then:

answer

MRP will increase

question

Which of the following statements is true?

answer

question

In Exhibit 10-3, suppose that in the interest of boosting incomes of the working poor, Congress imposes a minimum wage of $6.00 per hour. This minimum wage creates a(n):

answer

Excess supply of labor of food servers

question

What happens to the MP of labor when the market price of the good produced increases?

answer

Stays the same

question

Currently, union membership in the United States is about:

answer

15 percent

question

Of the following demographic groups, which has the lowest poverty rate in the U.S.?

answer

Families in which the "head of the household" has attained at least a bachelor's degree from a college or university

question

The social security tax is called FICA, which stands for:

answer

Federal Insurance Contributions Act

question

Which of the following statements is correct?

answer

About 25 percent of the U.S. population earns an income below the poverty line.

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