question
The figure given below shows the revenue and cost curves of a perfectly competitive firm.
In Figure 10.1, average fixed cost, at the profit-maximizing level of output, is equal to ______.
In Figure 10.1, average fixed cost, at the profit-maximizing level of output, is equal to ______.
answer
GH
question
Under perfect competition, the average revenue curve of the firm coincides with its average cost curve.
answer
False
question
Some competitive firms are willing to operate at a loss, in the short run, because:
answer
their average variable cost is less than the price.
question
A perfectly competitive firm maximizes profit when:
answer
its marginal revenue is equal to its marginal cost.
question
What causes the market supply curve to shift rightward?
answer
Entry of new firms
question
The following figure shows equilibrium at the industry and firm level.
According to Figure 10.6, at a price of $1, the firm would earn an economic profit of:
According to Figure 10.6, at a price of $1, the firm would earn an economic profit of:
answer
0.
question
A perfectly competitive firm's pricing decision depends on:
answer
the market supply and demand.
question
The table given below shows the total revenue and total cost of a firm at different levels of output.
Consider the perfectly competitive firm described in Table 10.2. How many units of the good should the firm produce to maximize profit?
Consider the perfectly competitive firm described in Table 10.2. How many units of the good should the firm produce to maximize profit?
answer
18 units
question
Graphically, consumer surplus is the area:
answer
above the equilibrium price and below the demand curve.
question
The figure given below shows the revenue and the cost curves of a perfectly competitive firm.
In Figure 10.3, the profit maximizing output of the firm is _____ units.
In Figure 10.3, the profit maximizing output of the firm is _____ units.
answer
14
question
The figure given below shows the revenue and cost curves of a perfectly competitive firm.
According to Figure 10.2, the break-even price of the firm is:
According to Figure 10.2, the break-even price of the firm is:
answer
$30
question
Perfect competition describes a firm's behavior in a market model where:
answer
there are many firms producing identical products.
question
If a firm is a price taker, then the demand curve faced by the firm is perfectly elastic.
answer
True
question
A perfectly competitive firm incurs a loss in the short run, if at the profit maximizing level of output:
answer
the average revenue curve lies below the average cost curve.
question
A perfectly competitive firm's supply curve is the portion of the:
answer
MC curve that lies above the AVC curve.
question
Which of the following is true of the model of perfect competition?
answer
An individual firm cannot affect the market price.
question
The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.
Refer to Figure 10.7 and calculate the consumer surplus.
Refer to Figure 10.7 and calculate the consumer surplus.
answer
$400
question
In the short run, the firm's break-even point is:
answer
the minimum point of the firm's average-total-cost curve.
question
The figure given below shows the revenue and cost curves of a perfectly competitive firm.
According to Figure 10.5, the firm has:
According to Figure 10.5, the firm has:
answer
losses equal to the area P1BDE.
question
The figure given below shows the revenue and cost curves of a perfectly competitive firm.
Refer to Figure 10.2. Compute the profit earned by the firm at the profit-maximizing level of output.
Refer to Figure 10.2. Compute the profit earned by the firm at the profit-maximizing level of output.
answer
$300
question
If marginal revenue is greater than marginal cost, a producer must reduce the level of output to maximize profit.
answer
False
question
The addition to a business firm's total costs, that comes from producing one more unit of output, is its:
answer
Marginal Cost
question
The following graph shows the demand and cost curves of an imperfectly competitive firm. MC and ATC represent the marginal cost curve and the average cost curve respectively.
According to Figure 9.1, what is the firm's profit when it sells quantity Q1 at price P1?
According to Figure 9.1, what is the firm's profit when it sells quantity Q1 at price P1?
answer
Rectangle DCEF
question
The table given below shows the total revenue and total cost of producing a commodity.
In Table 9.1, in order to maximize profits, the firm should produce ____ units of output.
In Table 9.1, in order to maximize profits, the firm should produce ____ units of output.
answer
Eight
question
Graphically, a firm's total revenue is represented by the:
answer
rectangle formed under the demand curve at a given price and quantity combination.
question
Assume that a firm is producing an output level such that marginal revenue equals marginal cost. One can correctly conclude that the firm is producing a level of output which is:
answer
equal to the profit maximizing level of output.
question
A zero economic profit is not a bad thing because:
answer
it is a situation in which the owners, or shareholders, of a firm could not do better elsewhere.
question
Suppose at a certain quantity of output, a firm's average-total-cost curve lies above its demand curve. At this quantity of output, the firm:
answer
is earning negative economic profit.
question
Consider a publicly held firm (one whose stock shares are traded on the stock exchange) that earned revenue worth $350 million and incurred land, labor, and debt costs worth $320 million. The stockholders who have invested a total of $100 million in this firm could have earned 10 percent return on other comparable investments.
According to the information in Scenario 9.2, how much accounting profit did the firm make last year?
According to the information in Scenario 9.2, how much accounting profit did the firm make last year?
answer
30 Million
question
The figure given below shows the revenue and cost curves of a firm. MC represents the marginal cost curve, AC the average cost curve, MR the marginal revenue curve, and AR the average revenue curve.
Refer to Figure 9.3. The firm suffers a negative profit by producing:
Refer to Figure 9.3. The firm suffers a negative profit by producing:
answer
50 Units
question
The equity capital of a privately owned firm includes:
answer
the owner's own dollars put into the firm.
question
Under perfect competition, at the profit-maximizing level of output:
answer
price is equal to marginal revenue.
question
The only decision that a perfectly competitive firm makes is:
answer
what quantity to produce.
question
Each firm under perfect competition charges different prices for its products.
answer
False
question
The figure given below shows the cost curves of a firm.
In Figure 9.3, what is the total cost of producing 140 units of the output?
In Figure 9.3, what is the total cost of producing 140 units of the output?
answer
$7,700
question
The table given below shows the total revenue and total cost of producing a commodity.
In Table 9.1, the marginal revenue from the sixth unit of output is:
In Table 9.1, the marginal revenue from the sixth unit of output is:
answer
$1,200
question
In economic theory, we assume that the goal of the firm is to:
answer
maximize the profit.
question
The characteristic that distinguishes a monopolistically competitive market from a perfectly competitive market is the:
answer
differentiation of products.
question
Assume that a firm's marginal revenue curve intersects the rising portion of the marginal cost curve at 100 units of output. At this output level, a profit-maximizing firm's total cost is $1,000. If the price of the product is $10 per unit, the firm will earn an economic profit of:
answer
Zero
question
The accounting profit of a business firm is also called:
answer
net operating income.
question
The table below shows the total cost of producing different units of a commodity.
From Table 8.2, derive the value of total fixed costs.
From Table 8.2, derive the value of total fixed costs.
answer
100
question
From Table 8.2, derive the value of total fixed costs.
answer
False
question
From Table 8.2, derive the value of total fixed costs.
Refer to Table 8.1. What is the marginal cost of producing the fifth unit?
Refer to Table 8.1. What is the marginal cost of producing the fifth unit?
answer
6
question
The table given below shows the total fixed and variable costs of a firm.
If the firm described in Table 8.3 decides to produce nothing, its:
If the firm described in Table 8.3 decides to produce nothing, its:
answer
total cost will equal $40.
question
The long-run average total cost curve represents:
answer
the lowest cost of producing any level of output when all the factors are variable.
question
"As I add more workers to the factory line, the additional output produced by each additional worker seems to decline. Eventually, the workers just get in each others' way."
This statement by a factory supervisor refers to the law of:
This statement by a factory supervisor refers to the law of:
answer
diminishing marginal returns.
question
The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.
Refer to the Figure 8.3. In the long run, an increase in production from Q1 to Q3 would:
Refer to the Figure 8.3. In the long run, an increase in production from Q1 to Q3 would:
answer
decrease average cost by C3 - C1.
question
If long-run costs are plotted on the vertical axis and the quantity of output is plotted on the horizontal axis, a line that is perfectly horizontal implies:
answer
constant returns to scale.
question
The table given below shows the average total cost of production of a firm at different levels of the output.
In Table 8.5, what is the total cost of producing 4 units?
In Table 8.5, what is the total cost of producing 4 units?
answer
20
question
For a steel manufacturing firm, overhead costs would include:
answer
insurance premiums of the firm.
question
The table given below shows the total cost of producing different units of the output by a competitive firm.
Refer to Table 8.4. At 4 units of output,
Refer to Table 8.4. At 4 units of output,
answer
AFC is $6.25 and AVC is $10.
question
The marginal fixed cost of a firm:
answer
is always equal to zero and is therefore ignored by economists.
question
Diminishing marginal returns means that as you combine more units of a variable resource with a set of fixed resources:
answer
the marginal physical product of the variable input decreases.
question
The table given below shows the average total cost of production of a firm at different levels of the output.
Refer to Table 8.5. At what level of production will the average total cost curve intersect the marginal cost curve?
Refer to Table 8.5. At what level of production will the average total cost curve intersect the marginal cost curve?
answer
4 units
question
Fixed costs are costs paid for:
answer
resources that do not change with changes in output.
question
If an average cost curve is U-shaped, then:
answer
costs per unit first fall, then reach a minimum, and then increase as output is increased.
question
According to economic theory, the difference between the long run and the short run is:
answer
the ability for a firm to vary all resources.
question
The figure given below shows cost curves of a firm.
Refer to Figure 8.2. When Average Variable Cost (AVC) is at a minimum, which of the following is true?
Refer to Figure 8.2. When Average Variable Cost (AVC) is at a minimum, which of the following is true?
answer
MC equals HN
question
The term minimum efficient scale refers to:
answer
the minimum point of the long-run average-cost curve, or the output level at which the cost per unit of output is the lowest.
question
When the marginal-cost curve lies above the average-total-cost curve, the average-total-cost curve slopes up and the average-variable-cost curve slopes down.
answer
False
question
The study of decision making that assumes people are rational in a broad sense, even if they do not have complete and perfect information is called _____.
answer
behavioral economics
question
To decide which of the two goods is a better buy, a consumer should compare the products' _____.
answer
marginal utilities per dollar
question
When the price of a good changes, the substitution effect occurs because:
answer
the relative price of that good changes compared to other goods in the consumption bundle.
question
Suppose a friend gives you two pieces of gum, and you decide to have one piece now and save the other for tomorrow. You do this because:
answer
the marginal utility you get from the second piece will be higher tomorrow.
question
The additional satisfaction that a consumer receives from one more unit of a good or service is known as _____.
answer
marginal utility
question
The table given below records the total utility derived from the consumption of avocados.
According to Table 7.2, the marginal utility of the third avocado is _____ utils.
According to Table 7.2, the marginal utility of the third avocado is _____ utils.
answer
12
question
The below table shows the average utility (in utils) obtained from the consumption of goods A and B.
Refer to Table 7.3. The marginal utility of the fourth unit of B is _____ utils.
Refer to Table 7.3. The marginal utility of the fourth unit of B is _____ utils.
answer
1
question
As long as the marginal utilities per dollar obtained from the last unit of all products consumed are the same, _____.
answer
the consumer is in equilibrium and will not reallocate income
question
If a consumer purchases more of a product, then most likely the marginal utility of _____.
answer
that product decreases
question
_____ is a measure of the total satisfaction derived from consuming a quantity of some good or service.
answer
Total utility
question
In an indifference map, one would most likely see indifference curves that:
answer
are bowed inward toward the origin.
question
The table given below reports the total utility derived by an individual from the consumption of different units of goods A, B, and C.
Refer to Table 7.4. If the consumer's income increases from $10 to $20 but the prices of each of the goods doubles, the consumer would maximize utility by purchasing _____.
Refer to Table 7.4. If the consumer's income increases from $10 to $20 but the prices of each of the goods doubles, the consumer would maximize utility by purchasing _____.
answer
3 units of good A, 5 units of good B, and 6 units of good C
question
Total utility is maximized when _____.
answer
the marginal utility per dollar expenditure is the same for all goods consumed
question
Suppose the prices of goods X, Y, and Z are $4, $1, and $5, respectively, and the last unit purchased of good X has a marginal utility MUx = 16 utils. At the point of equilibrium, the marginal utility of the last unit purchased of goods Y and Z will be:
answer
MUy = 4 utils and MUz = 20 utils, respectively.
question
If one were to plot the data from Table 7.1 (with utility on the vertical axis and quantity of the good on the horizontal axis):
answer
the marginal utility curve would intersect the horizontal axis at the third unit of the good.
question
To economists, feelings such as peace, serenity, religious devotion, and self-esteem are captured in the concept known as _____.
answer
utility
question
Assume that a consumer purchases a combination of products X and Y and MUx / Px = 75 utils per dollar and MUy / Py = 50 utils per dollar. To maximize utility without spending more dollars, the consumer should buy:
answer
more of X and less of Y.
question
The table below shows the total utility associated with various units of goods X and Y.
Refer to Table 7.5. Given that the price of good X is $2 per unit, the price of good Y is $5 per unit, and that the consumer spends a total of $14 on both goods, what is the total utility associated with the utility-maximizing combination?
Refer to Table 7.5. Given that the price of good X is $2 per unit, the price of good Y is $5 per unit, and that the consumer spends a total of $14 on both goods, what is the total utility associated with the utility-maximizing combination?
answer
172
question
According to the law of diminishing utility, _____.
answer
the rich people should have a higher tax rate as compared to poor people
question
Marginal utility diminishes more quickly:
answer
the shorter the time period between two successive consumptions
question
When product A is a substitute for product B, the cross-price elasticity of demand for products A and B will be _____.
answer
positive
question
Which of the following situations is represented by a nearly horizontal supply curve for a good?
answer
Small changes in the price of the good lead to large changes in the quantity supplied of the good.
question
The table given below reports the price and quantity demanded of a commodity.
According to Table 6.1, when the price increases from $5 to $6, the price elasticity of demand is _____.
According to Table 6.1, when the price increases from $5 to $6, the price elasticity of demand is _____.
answer
1.67
question
If the demand for corn is elastic, then:
answer
a decrease in price will reduce total revenue for corn producers.
question
Price elasticity of demand is the sole determinant of profit for a firm.
answer
false
question
Which of the following goods is likely to have an income elasticity of demand that is less than zero?
answer
A box of generic macaroni and cheese dinner
question
Since an expensive sports car constitutes a greater portion of a consumer's budget than does laundry soap, the price elasticity of demand for an expensive sports car is _____.
answer
relatively more elastic
question
When the price of hot dogs at the supermarket increases, the quantity demanded of hot dog buns declines. This situation describes:
answer
c. the negative cross-price elasticity of demand for hot dogs and hot dog buns.
question
If 12 candy bars are demanded at $0.30 each and 4 candy bars are demanded at $0.50 each, what is the elasticity of demand over the price range from $0.30 to $0.50?
answer
2
question
The figure given below shows the demand curves for five products: A, B, C, D, and E.
Refer to Figure 6.1. Which of the following is true of the demand curve for A?
Refer to Figure 6.1. Which of the following is true of the demand curve for A?
answer
There is no change in the quantity demanded of A as the price changes.
question
The figure given below shows the demand curves for five products: A, B, C, D, and E.
Refer to Figure 6.1. The demand curve B is:
Refer to Figure 6.1. The demand curve B is:
answer
less elastic compared to demand curve C.
question
Goods whose income elasticity of demand is greater than zero are _____.
answer
Normal Goods
question
If = -1.50 for a good, and price of the good decreases by 20 percent, then:
answer
quantity demanded will increase by 30 percent.
question
Demand for a good becomes more elastic as:
answer
a good makes up a larger percentage of a consumer's budget.
question
Acme Tools manufactures anvils, a forging tool. When the price of anvils was increased from $7 to $13, Acme Tools was willing and able to increase production from 1 to 4 units per day. Using the midpoint formula, what is Acme's price elasticity of supply for anvils?
answer
2
question
If the price elasticity of supply is 0.75, it would imply that a _____.
answer
120 percent increase in price would increase the quantity supplied by 90 percent
question
What would be the consequence of a 10 percent decrease in the price of a good for which price elasticity of demand is 5?
answer
A 50 percent increase in the quantity demanded
question
Assume that the price elasticity of demand for a commodity is 0.20. A 10 percent increase in the price of the commodity will be followed by a:
answer
2 percent decrease in the quantity demanded.
question
A 0.5% increase in the price of a particular product causes the quantity demanded of the product to drop to zero. This means that the price elasticity of demand for the product is:
answer
perfectly elastic.
question
When the manager of a local movie theater raises the price of movie tickets from $7.50 to $8.50, his total revenue falls. This means that:
answer
the demand for movie tickets is highly elastic.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
