question
A price taker has control over the price in what?
answer
The market place
question
Sally owns a bakery. Her building rent is $1,000 per month and her own lease is $500 per month. The rent lease are what type of cost?
answer
Fixed cost
question
For the year ending 12/31/19 Sally' Bakery had total revenue of $100,000 and total explicit costs of $80,000. Sally's opportunity cost of her time was $40,000 because she could earn that salary as a marketing manager. What was sally's accounting profit or loss?
answer
$20,000
question
Fixed cost cannot be changed when?
answer
In the short run
question
economies of scale
answer
When costs decrease as output is increased in the long run
question
Assume Sally has one employee and can produce 50 cupcakes per hour. She hires a second employee and now they can produce 150 cupcakes per hour. What is the marginal product of labor at 2 employees
answer
100 cupcakes
question
Total profit are maximized when?
answer
Marginal revenue = marginal costs (MR=MC)
question
Sally's cost in labor os $10,000 if she produces 20,000 cupcakes or $50,000 if she produces 100,000 cupcakes. Labor could be categorized as what type if cost?
answer
variable cost
question
Assume Sally's bakery is in a competitive market where the price is $5 per cupcake. Further assume her bakery has an ATC of $6 and AVC of $4. In the short run. Sally should shut down because she is losing $1 per cupcake.
answer
No, she should stay in business
question
Assume Sally's Bakery is a competitive firm and its producing 100 dozen cupcakes. Her price per cupcake is $5. If her AVC is $3, her ATC is $4 and her MC is $6, should she accept the next order for 1 dozen?
answer
No because the price is less than the her average variable cost (AVC)
question
The amount of additional output given one additional input is know as what?
answer
Marginal Product
question
What are characteristics of a competitive market?
answer
Many sellers selling similar products,
free entry and exit out the market (no barriers to entry,
Firms in a competitive market are price taker
free entry and exit out the market (no barriers to entry,
Firms in a competitive market are price taker
question
sally adds a third employee and output increases to 300 cupcakes. What economic concept that explains the increasing marginal product?
answer
Benefits of specialization
question
Unrecoverable costs resulting from past business decisions and that should not be considered in future decisions are what?
answer
Sunk cost
question
In a perfectly competitive market a firm will earn ?
answer
No economic profit
question
Sally produces 20,000 cupcakes and has Total Variable Costs (TVC) of $10,000. What is Sally's Average Variable Cost (AVG)?
answer
.50
question
For the year ending 12/31/19 Sally' Bakery had total revenue of $100,000 and total explicit costs of $80,000. Sally's opportunity cost of her time was $40,000 because she could earn that salary as a marketing manager. What was sally's economic profit or loss?
answer
-20,000
question
marginal product
answer
the change in Q the change in input
question
TC
answer
TFC+TVC
question
AVC
answer
TVC/Q
question
AFC
answer
TFC/Q
question
ATC
answer
TC/Q
question
MC
answer
the change in TVC/ the change in Q
question
Short Run
answer
P < AVC
question
Long Run
answer
P > ATC
question
TR
answer
P * Q
question
TP
answer
TR-TC
question
price discrimination
answer
the business selling the same good at different prices to different customers
question
economies of sclae
answer
Only for Long Run
question
Assume that graph represents a monopoly. At what price would the monopoly maximize
answer
P2
question
Some monopolies are created by the government through our laws and regulations such as
answer
patents and copyrights.
question
Can earn an economic profit in the short-run but not in the long-run because competition will catch up to the monopolist eventually.
answer
Monopoly
question
Restrictions that make it difficult for a competitor to enter a market are known as
answer
barriers to entry
question
Total profits for a monopoly are maximized where
answer
marginal revenue equals marginal cost
question
Problems created by monopolies include what?
answer
dead weight loss
high prices
reduced quality and service
high prices
reduced quality and service
question
To solve the problems created by a monopoly the government can do which of the following?
answer
break up the monopoly into smaller companies
reduce trade barriers
operate the monopoly
reduce trade barriers
operate the monopoly
question
Barriers to entry can be created by what?
answer
a firm controlling a resource used in the production process,
government laws,
economies of scale
government laws,
economies of scale
question
A monopoly is characterized by what?
answer
a single seller with a unique product with no close substitutes,
a price taker,
minimal barriers to entry
a price taker,
minimal barriers to entry
question
Which one of the following is not a benefit of price discrimination?
answer
increased consumer surplus
question
Which of the following is not a requirement for price discrimination to be effective?
answer
sellers must set a single price in the beginning
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