Economics Modules 8 and 9 Practice Exams

question

Silvio's Pizzas is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. When Silvio's uses 2 ovens and hires the 3rd worker, the marginal product of labor is [ ] the average product of labor, therefore the average product of labor [ ].

answer

less than; decreases

question

When a firm is experiencing economies of scale

answer

the LRAC curve slopes downward.

question

Electric utility companies have built larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of

answer

economies of scale.

question

Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above. Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. Suppose Silvio's uses Plant 1 and hires 3 workers. What is the firm's average fixed cost?

answer

$11.00

question

In the short run

answer

no firm experiences economies of scale.

question

Diseconomies of scale definitely means that as the firm increases its output, its

answer

long-run average total cost increases.

question

The average total cost curves for plants A, B, C and D are shown in the above figure. It is possible that the long-run average cost curve runs through points

answer

d, e, and f.

question

In the above figure, the long-run average cost curve exhibits diseconomies of scale

answer

between 20 and 25 units per hour.

question

The average total cost curves for Plant 1, ATC0, and Plant 2, ATC1, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

answer

greater than 25

question

Consider a firm, using capital (K) and labor (L) in the production process, that wants to expand production. Suppose MPK = 200 and MPL = 60. The cost of capital is r = 50. The firm would use more labor to expand production only if the wage rate is less than _____ dollars.

answer

question

A private psychiatrist's office is a business that will demonstrate ______________, as it will face increasing average costs in the long run.

answer

diseconomies of scale

question

An economy is on its production possibilities frontier. If the economy faces diminishing marginal returns, what will happen to the opportunity cost as the production of one of the categories of goods increases?

answer

The opportunity cost will increase as it takes more to produce the good.

question

In the long run, the total cost function will be:

answer

Upward sloping.

question

An efficient Nebraska corn farm decides to hire more workers and use fewer harvesting machines after learning of:
I. An increase in corn commodity prices.
II. A decrease in fuel prices.
III. An increase in worker productivity.
IV. An increase in harvesting machine maintenance costs.

answer

III and IV

question

In the long run, if a firm is on the downward-sloping portion of its LRAC curve, the firm is currently experiencing ______.

answer

economies of scale.

question

If the firm were to choose a permanent output level of Q = 6,000, the lowest average cost would be achieved with the ______.

answer

medium factory.

question

The table shows the average costs of production for various quantities, given three different amounts of capital. Each factory illustrates a(n) _____ average cost curve.

answer

U-shaped

question

Given the following facts, what should the firm do in the short run? In the long run?Fixed costs are $50,000. Total costs are $90,000. Total revenues are $45,000.

answer

Continue to produce in the short run; leave the industry in the long run.

question

Suppose a company with a single large factory expands to multiple locations. This would require the firm to hire more mid-level management positions and establish an HR department. This firm is likely experiencing ________ with this expansion.

answer

diseconomies of scale

question

If the firm were to choose a permanent output level of Q = 4,000, the lowest average cost would be achieved with the _______.

answer

small factory.

question

In the long run, if a firm is operating with economies of scale, it is on the ______ portion of its LRAC.

answer

downward-sloping

question

A firm is producing where the Marginal Product of Labor is 18 and the Marginal Product of Capital is 10. The price of labor is $3 and the cost of capital is $2.
They cannot adjust their capital, so are they in the short run or the long run?

answer

Short run

question

At Wisconsin's snowy Lambeau Field, a football stadium, snow removal is currently done by a mix of workers (equipped with shovels and paid minimum wage) and automated self-operating snowblower machines, which require no labor. The stadium is currently using the optimal combination of both snowblowers and workers. If Wisconsin's minimum wage rises, and nothing else changes, what should the stadium do?

answer

Utilize more machines and fewer workers.

question

If a production process faces diminishing marginal returns, which of the following is most likely?

answer

Marginal costs are increasing.

question

Given the following data, what should the firm do?Current production = 1,000
Current price = $10
Marginal cost = $10
Total costs = $15,000
Fixed cost = $6,000

answer

Continue to produce in the short run, but close down in the long run.

question

Rising average product as inputs increase means that which of the following is happening to costs?

answer

Average costs alone are falling.

question

Which of the following would be likely in a market with firms experiencing economies of scale?

answer

Most of the firms will tend to be large.

question

Consider a firm, using capital (K) and labor (L) in the production process, that wants to expand production. Suppose MPK = 200 and MPL = 50. The cost of capital is r = 80, and the wage rate is w = 10. Should this firm employ more labor or more capital?

answer

Labor

question

A car manufacturing plant in Michigan employs the optimal combination of both unionized and non-unionized labor. The plant agrees to a new union contract that stipulates higher wages. As the plant re-adjusts its inputs, marginal product of non-unionized workers will:

answer

Decrease.

question

If the firm were to choose a permanent output level of Q = 8,000, the lowest average cost would be achieved with the _______.

answer

large factory.

question

A small shirt factory in Taiwan doubles its labor inputs and experiences a tripling in output. A large catering kitchen in Tokyo increases its inputs by 30% and experiences a 50% increase in production. Which of the following is true?

answer

Both firms enjoy economies of scale.

question

The key difference between the short-run and long-run model of the firm is that:

answer

We assume at least one fixed input in the short run and all variable inputs in the longe run.

question

Suppose in the long run a firm's labor costs decrease. What will happen regarding the LRAC?

answer

The entire LRAC function will shift downward.

question

Use the numbers to build the firm's LRAC function. In other words, assuming that at any level of output, the firm uses the proper factory size to get the lowest average cost of production. As this firm grows from 2,000 to 8,000 units, it will be experiencing:

answer

Economies of scale.

question

answer

Constant returns to scale.

question

A firm is producing where the Marginal Product of Labor is 18 and the Marginal Product of Capital is 10. The price of labor is $3 and the cost of capital is $2.
The firm is planning their future inputs and can now adjust both labor and capital. How should they adjust inputs?

answer

Increase labor and decrease capital

question

In the typical short run model of the firm, we generally assume that labor is_______ and capital is________.

answer

variable; fixed

question

Mimi wants to see if she should buy another oven for her restaurant. How might she use marginal analysis to make a decision?

answer

Examine the price of the oven and the marginal product of the oven.

question

In order to maximize profits at any level of output, the firm must:

answer

Minimize production costs.

question

Suppose that as a firm grows, it first experiences economies of scale, then constant returns to scale, then diseconomies of scale. The LRAC for this firm will be ______.

answer

shaped like a wide U.

question

A pool-cleaning firm employs cleaning machines and cleaning workers. If local wages fall and robots become more effective, the firm should employ:

answer

One cannot tell.

question

A restaurant employs 10 workers and has one oven. The firm hires an 11th worker. The week after, it hires a 12th worker. The marginal product of the 12th worker is less than the 11th worker because of _______.

answer

diminishing returns.

question

Suppose a firm wants to do marginal analysis to see if it should employ more capital or more labor in order to increase output. The firm knows the prices of the inputs. Is this enough information to answer the question at hand?

answer

No, the firm also needs to know the marginal productivities of each of the inputs.

question

Diminishing returns is most relevant when:

answer

None of the these.

question

Economies of scale occurs when long-run average costs are [ ] and diseconomies of scale occurs when long-run average costs are [ ].

answer

decreasing/ increasing

question

Consider a firm, using capital (K) and labor (L) in the production process, that wants to expand production. Suppose MPK = 400. The cost of capital is r = 80, and the wage rate is w = 10. The firm would use more labor to expand production only if the marginal product of labor is greater than _____.

answer

question

Consider the concepts of economies of scale and diseconomies of scale. What is meant by the word "scale" in these concepts?

answer

The size of the firm.

question

Suppose in the long run a firm decides to grow in size and increase output. What will happen regarding the LRAC?

answer

The firm will move from one point to another point, from left to right, on the same LRAC.

question

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has

answer

infinite elasticity.

question

A market is perfectly competitive if

answer

there are many firms in it, each selling an identical product.

question

Marginal revenue is defined as

answer

the change in total revenue that results from one-unit increase in the quantity sold.

question

A perfectly competitive firm has a total revenue curve that is

answer

upward sloping with a constant slope.

question

Which of the following is NOT an assumption of perfect competition?

answer

Firms compete by making their product different from products produced by other firms.

question

The goal of a perfectly competitive firm is to maximize its

answer

economic profit.

question

The market demand for wheat is ________ and the demand for wheat produced by an individual farm is ________.

answer

not perfectly elastic; perfectly elastic

question

The economic profit of a perfectly competitive firm

answer

is less than its total revenue.

question

For a perfectly competitive firm, the shutdown point is the

answer

amount of output at which price equals minimum average variable cost.

question

For a perfectly competitive firm, as its output increases its marginal revenue ________ and its marginal cost ________.

answer

does not change; changes

question

Bob's Lawn Care Services is a perfectly competitive firm that currently mows 22 lawns a week. Bob's marginal cost exceeds the price he charges. Bob can increase his profit if he

answer

mows fewer than 22 lawns a week.

question

As long as it does not shut down, a profit-maximizing perfectly competitive firm will.

answer

produce so that marginal revenue equals marginal cost.

question

If the price exceeds the average variable cost, by producing the level of output such that marginal revenue equals marginal cost, the firm ensures that it will

answer

earn the largest profit possible.

question

The donut market is perfectly competitive. The figure shows the costs of a typical donut producer. In the short run, the donut producer's supply curve is the curve running from point ________ to point E.

answer

question

In the above figure, if the price is $8 per unit, how many units will a profit maximizing perfectly competitive firm produce?

answer

question

The above table shows the per day total cost for Kiley's Baseball Glove Company. Each glove is priced at $50 and Kiley's Baseball Glove Company is a perfectly competitive firm. At which of the following amounts of output is the economic profit maximized for Kiley's Baseball Glove Company?

answer

question

Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, how much economic profit does the firm make?

answer

question

The figure above shows a perfectly competitive firm. The firm is operating; that is, the firm has not shut down. The firm is

answer

incurring a economic loss of $200.

question

The figure illustrates the short-run costs of Paul's Picture Frames Inc. The picture frame market is perfectly competitive and the market price is $30 a frame. Paul produces ________ frames each week, makes ________ of total revenue, and makes zero ________ profit.

answer

300; $9,000; economic

question

The figure above shows the marginal revenue and costs of a perfectly competitive firm. The firm's profit is maximized when the firm produces

answer

170 units of output.

question

The figure above shows the marginal revenue and costs of a perfectly competitive firm. The marginal cost of the last unit produced is

answer

$16 per unit.

question

In the short run, an increase in demand for a good that is sold in a perfectly competitive market

answer

increases the economic profits of existing firms in the market.

question

The figure above shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces

answer

10 units of output and incurs an economic loss.

question

Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's economic profit?

answer

between $0.51 and $1.00 per hour

question

The above figure shows the cost curves for a perfectly competitive firm. If all firms in the market have the same cost curves and the price equals $16 per unit

answer

over time, the price will fall as new firms enter the market.

question

In the long-run equilibrium, perfectly competitive firms make zero economic profit because of

answer

the ability of firms to enter and exit.

question

In the long-run equilibrium in a perfectly competitive market, the economic profit of the firms is

answer

zero.

question

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Should Homer's exit the market in the long run?

answer

yes, because he is incurring an economic loss

question

In the long-run, if firms in a perfectly competitive market are incurring persistent economic losses, some firms will

answer

exit and the price will rise.

question

In the long run, perfectly competitive firms earn just enough revenue to

answer

pay all opportunity costs.

question

In the long run, the economic profit of a firm in a perfectly competitive market

answer

will equal zero.

question

In a perfectly competitive market that is in long-run equilibrium, a rightward shift in the market demand curve results in

answer

none of the events listed above.

question

In the long run, perfectly competitive firms make zero economic profit (their owners earn a normal profit) because

answer

any economic profit would attract newcomers to the industry.

question

In a perfectly competitive market that is in long-run equilibrium, a permanent leftward shift in the market demand curve

answer

lowers the price at first but then raises it as firms leave the market.

question

In a perfectly competitive market, a permanent increase in demand initially brings a higher price, economic

answer

profit; and entry to the market.

question

Suppose a perfectly competitive market is in long-run equilibrium. If there is a permanent increase in demand,

answer

All of these answers are correct.

question

The industry that produces zangs is in long-run equilibrium. Then the demand for zangs increases permanently. As a result, firms in the industry will ________. Some firms will ________ the industry, and the industry supply curve will shift ________.

answer

make economic an profit; enter; rightward

question

The figure above shows a typical perfectly competitive corn farm, whose marginal cost curve is MC and average total cost curve is ATC. The market is initially in a long-run equilibrium, where the price is $3.00 per bushel. Then, the market demand for corn decreases and, in the short run, the price falls to $2.50 per bushel. In the new short-run equilibrium, the farm produces ________ bushels of corn and sells corn at ________ per bushel.

answer

250,000; $2.50

question

In a perfectly competitive market that is in long-run equilibrium, which of the following will NOT occur?

answer

Entrepreneurs want to enter this industry.

question

In the long-run equilibrium, perfectly competitive firms produce the level of output such that

answer

Both answers average total cost in minimized and marginal cost equals the price are correct.

question

The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. Which of the following statements is TRUE?

answer

The firm is producing at minimum long-run average cost.

question

In the long-run equilibrium, perfectly competitive firms produce where

answer

average total cost in minimized.

question

The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. All other firms in the industry have identical curves. Which of the following statements is TRUE?

answer

None of these is true.

question

In the long-run equilibrium for a perfectly competitive market

answer

All of these are correct.

question

In the long-run equilibrium in a perfectly competitive market, the firms produce at the ________ possible average total cost and the price equals the ________ possible average total cost.

answer

lowest; lowest

question

Consumer surplus ________.

answer

plus producer surplus is maximized when resources are used efficiently

question

If the donut industry is perfectly competitive and is in long-run equilibrium, then the price of a donut

answer

equals long-run average cost.

1 of 95

question

answer

less than; decreases

question

When a firm is experiencing economies of scale

answer

the LRAC curve slopes downward.

question

Electric utility companies have built larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of

answer

economies of scale.

question

answer

$11.00

question

In the short run

answer

no firm experiences economies of scale.

question

Diseconomies of scale definitely means that as the firm increases its output, its

answer

long-run average total cost increases.

question

The average total cost curves for plants A, B, C and D are shown in the above figure. It is possible that the long-run average cost curve runs through points

answer

d, e, and f.

question

In the above figure, the long-run average cost curve exhibits diseconomies of scale

answer

between 20 and 25 units per hour.

question

The average total cost curves for Plant 1, ATC0, and Plant 2, ATC1, are shown in the figure above. Over what range of output is it efficient to operate Plant 2?

answer

greater than 25

question

answer

question

A private psychiatrist's office is a business that will demonstrate ______________, as it will face increasing average costs in the long run.

answer

diseconomies of scale

question

answer

The opportunity cost will increase as it takes more to produce the good.

question

In the long run, the total cost function will be:

answer

Upward sloping.

question

answer

III and IV

question

In the long run, if a firm is on the downward-sloping portion of its LRAC curve, the firm is currently experiencing ______.

answer

economies of scale.

question

If the firm were to choose a permanent output level of Q = 6,000, the lowest average cost would be achieved with the ______.

answer

medium factory.

question

The table shows the average costs of production for various quantities, given three different amounts of capital. Each factory illustrates a(n) _____ average cost curve.

answer

U-shaped

question

Given the following facts, what should the firm do in the short run? In the long run?Fixed costs are $50,000. Total costs are $90,000. Total revenues are $45,000.

answer

Continue to produce in the short run; leave the industry in the long run.

question

answer

diseconomies of scale

question

If the firm were to choose a permanent output level of Q = 4,000, the lowest average cost would be achieved with the _______.

answer

small factory.

question

In the long run, if a firm is operating with economies of scale, it is on the ______ portion of its LRAC.

answer

downward-sloping

question

answer

Short run

question

answer

Utilize more machines and fewer workers.

question

If a production process faces diminishing marginal returns, which of the following is most likely?

answer

Marginal costs are increasing.

question

Given the following data, what should the firm do?Current production = 1,000
Current price = $10
Marginal cost = $10
Total costs = $15,000
Fixed cost = $6,000

answer

Continue to produce in the short run, but close down in the long run.

question

Rising average product as inputs increase means that which of the following is happening to costs?

answer

Average costs alone are falling.

question

Which of the following would be likely in a market with firms experiencing economies of scale?

answer

Most of the firms will tend to be large.

question

answer

Labor

question

answer

Decrease.

question

If the firm were to choose a permanent output level of Q = 8,000, the lowest average cost would be achieved with the _______.

answer

large factory.

question

answer

Both firms enjoy economies of scale.

question

The key difference between the short-run and long-run model of the firm is that:

answer

We assume at least one fixed input in the short run and all variable inputs in the longe run.

question

Suppose in the long run a firm's labor costs decrease. What will happen regarding the LRAC?

answer

The entire LRAC function will shift downward.

question

answer

Economies of scale.

question

answer

Constant returns to scale.

question

answer

Increase labor and decrease capital

question

In the typical short run model of the firm, we generally assume that labor is_______ and capital is________.

answer

variable; fixed

question

Mimi wants to see if she should buy another oven for her restaurant. How might she use marginal analysis to make a decision?

answer

Examine the price of the oven and the marginal product of the oven.

question

In order to maximize profits at any level of output, the firm must:

answer

Minimize production costs.

question

Suppose that as a firm grows, it first experiences economies of scale, then constant returns to scale, then diseconomies of scale. The LRAC for this firm will be ______.

answer

shaped like a wide U.

question

A pool-cleaning firm employs cleaning machines and cleaning workers. If local wages fall and robots become more effective, the firm should employ:

answer

One cannot tell.

question

answer

diminishing returns.

question

answer

No, the firm also needs to know the marginal productivities of each of the inputs.

question

Diminishing returns is most relevant when:

answer

None of the these.

question

Economies of scale occurs when long-run average costs are [ ] and diseconomies of scale occurs when long-run average costs are [ ].

answer

decreasing/ increasing

question

answer

question

Consider the concepts of economies of scale and diseconomies of scale. What is meant by the word "scale" in these concepts?

answer

The size of the firm.

question

Suppose in the long run a firm decides to grow in size and increase output. What will happen regarding the LRAC?

answer

The firm will move from one point to another point, from left to right, on the same LRAC.

question

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has

answer

infinite elasticity.

question

A market is perfectly competitive if

answer

there are many firms in it, each selling an identical product.

question

Marginal revenue is defined as

answer

the change in total revenue that results from one-unit increase in the quantity sold.

question

A perfectly competitive firm has a total revenue curve that is

answer

upward sloping with a constant slope.

question

Which of the following is NOT an assumption of perfect competition?

answer

Firms compete by making their product different from products produced by other firms.

question

The goal of a perfectly competitive firm is to maximize its

answer

economic profit.

question

The market demand for wheat is ________ and the demand for wheat produced by an individual farm is ________.

answer

not perfectly elastic; perfectly elastic

question

The economic profit of a perfectly competitive firm

answer

is less than its total revenue.

question

For a perfectly competitive firm, the shutdown point is the

answer

amount of output at which price equals minimum average variable cost.

question

For a perfectly competitive firm, as its output increases its marginal revenue ________ and its marginal cost ________.

answer

does not change; changes

question

Bob's Lawn Care Services is a perfectly competitive firm that currently mows 22 lawns a week. Bob's marginal cost exceeds the price he charges. Bob can increase his profit if he

answer

mows fewer than 22 lawns a week.

question

As long as it does not shut down, a profit-maximizing perfectly competitive firm will.

answer

produce so that marginal revenue equals marginal cost.

question

If the price exceeds the average variable cost, by producing the level of output such that marginal revenue equals marginal cost, the firm ensures that it will

answer

earn the largest profit possible.

question

answer

question

In the above figure, if the price is $8 per unit, how many units will a profit maximizing perfectly competitive firm produce?

answer

question

answer

question

Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, how much economic profit does the firm make?

answer

question

The figure above shows a perfectly competitive firm. The firm is operating; that is, the firm has not shut down. The firm is

answer

incurring a economic loss of $200.

question

answer

300; $9,000; economic

question

The figure above shows the marginal revenue and costs of a perfectly competitive firm. The firm's profit is maximized when the firm produces

answer

170 units of output.

question

The figure above shows the marginal revenue and costs of a perfectly competitive firm. The marginal cost of the last unit produced is

answer

$16 per unit.

question

In the short run, an increase in demand for a good that is sold in a perfectly competitive market

answer

increases the economic profits of existing firms in the market.

question

The figure above shows a perfectly competitive firm. The firm is operating; that is, it has not shut down. The firm produces

answer

10 units of output and incurs an economic loss.

question

Fast Copy is a perfectly competitive firm. The figure above shows Fast Copy's cost curves. If the market price is 4 cents per page, what is Fast Copy's economic profit?

answer

between $0.51 and $1.00 per hour

question

The above figure shows the cost curves for a perfectly competitive firm. If all firms in the market have the same cost curves and the price equals $16 per unit

answer

over time, the price will fall as new firms enter the market.

question

In the long-run equilibrium, perfectly competitive firms make zero economic profit because of

answer

the ability of firms to enter and exit.

question

In the long-run equilibrium in a perfectly competitive market, the economic profit of the firms is

answer

zero.

question

answer

yes, because he is incurring an economic loss

question

In the long-run, if firms in a perfectly competitive market are incurring persistent economic losses, some firms will

answer

exit and the price will rise.

question

In the long run, perfectly competitive firms earn just enough revenue to

answer

pay all opportunity costs.

question

In the long run, the economic profit of a firm in a perfectly competitive market

answer

will equal zero.

question

In a perfectly competitive market that is in long-run equilibrium, a rightward shift in the market demand curve results in

answer

none of the events listed above.

question

In the long run, perfectly competitive firms make zero economic profit (their owners earn a normal profit) because

answer

any economic profit would attract newcomers to the industry.

question

In a perfectly competitive market that is in long-run equilibrium, a permanent leftward shift in the market demand curve

answer

lowers the price at first but then raises it as firms leave the market.

question

In a perfectly competitive market, a permanent increase in demand initially brings a higher price, economic

answer

profit; and entry to the market.

question

Suppose a perfectly competitive market is in long-run equilibrium. If there is a permanent increase in demand,

answer

All of these answers are correct.

question

answer

make economic an profit; enter; rightward

question

answer

250,000; $2.50

question

In a perfectly competitive market that is in long-run equilibrium, which of the following will NOT occur?

answer

Entrepreneurs want to enter this industry.

question

In the long-run equilibrium, perfectly competitive firms produce the level of output such that

answer

Both answers average total cost in minimized and marginal cost equals the price are correct.

question

The figure above shows the marginal revenue and long-run cost curves for a perfectly competitive firm. Which of the following statements is TRUE?

answer

The firm is producing at minimum long-run average cost.

question

In the long-run equilibrium, perfectly competitive firms produce where

answer

average total cost in minimized.

question

answer

None of these is true.

question

In the long-run equilibrium for a perfectly competitive market

answer

All of these are correct.

question

In the long-run equilibrium in a perfectly competitive market, the firms produce at the ________ possible average total cost and the price equals the ________ possible average total cost.

answer

lowest; lowest

question

Consumer surplus ________.

answer

plus producer surplus is maximized when resources are used efficiently

question

If the donut industry is perfectly competitive and is in long-run equilibrium, then the price of a donut

answer

equals long-run average cost.

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