question
A perfectly elastic demand curve is ____________.
answer
horizontal
question
Price elasticity changes along a _____________ __________ ___________ curve.
answer
straight-line demand
question
If the percentage change in quantity demanded of a good increases by less than the percentage change in the price of the good, then the demand for the good is __________.
answer
inelastic
question
A price increase of a good will result in an increase in total revenue when the demand for the good is __________.
answer
inelastic
question
A decrease in price causes an increase in total revenue when demand is ___________.
answer
elastic
question
Along the elastic range of a demand curve, price changes cause total revenue to change in the (opposite or same) direction.
answer
opposite
question
A _________ demand curve is perfectly inelastic.
answer
vertical
question
The higher the absolute value of the elasticity of demand coefficient, the (less than or greater) is the elasticity of demand.
answer
greater
question
Economists focus on the ____________ _____________________ ___ ____ ____________________ of elasticity of demand.
answer
absolute value of the coefficient
question
Be able to compute the coefficients of elasticity of demand.
answer
.
question
Elasticity refers to ______________________.
answer
responsiveness
question
Governments examine ___________ of demand to estimate how changes in excise tax rates affect their tax revenues.
answer
elasticity
question
Elasticity of demand becomes (greater or less) over time.
answer
greater
question
The fewer the _________________ __ ___________________ for a good, the lower is its elasticity of demand.
answer
number of substitutes
question
A _________ ____________ refers to a zero economic profit.
answer
normal profits
question
In the long run, all costs are _______________.
answer
variable
question
Marginal product rises when___________________ falls.
answer
marginal cost
question
A firm's________________ _______________ cost curve is never U-shaped.
answer
average fixed
question
One measures an _____________ cost through the application of the opportunity cost principle.
answer
implicit
question
Be able to compute the MP of a resource.
answer
.
question
The law of _______________ _____________ implies that the marginal product of the variable input will eventually fall in the short run.
answer
diminishing returns
question
Be able to identify where diminishing returns become effective.
answer
...
question
The __________ __ ____________ on the TVC curve corresponds to the minimum point on the MC curve.
answer
point of inflection
question
Be able to locate levels of TFC and STC.
answer
...
question
Be able to identify the various cost curves.
answer
...
question
There are no __________ costs in the long run.
answer
fixed
question
Economies of scale are present over the range of output where the LRAC curve is ______________.
answer
falling
question
__________________ __ _________ are mainly caused by the difficulties inherent in managing a large enterprise.
answer
Diseconomies of scale
question
A competitive firm will sell nothing at prices (below or above) the market price.
answer
above
question
A firm can increase its profits by increasing its output beyond one at which MR > MC.
answer
...
question
A competitive firm's _________ _____ __________ curve is its marginal cost curve above its AVC curve.
answer
short-run supply
question
A perfectly competitive firm may have any one of ______ possible long-run supply curves.
answer
three
question
Perfect competition is characterized by many small sellers, a homogeneous or identical product, and freedom of entry or exit.
answer
...
question
In competition, P = MR for each firm.
answer
...
question
To maximize profit, a competitive firm must sell where P(MR) = MC.
answer
...
question
Profit (NR) = TR - TC (remember STC = TFC + TVC)
answer
...
question
Be able to locate where a firm would maximize profit (MR = MC).
answer
...
question
Be able to show where a firm will shut down in the short run (where P = AVC).
answer
...
question
Be able to show where a firm will break even (P = ATC).
answer
...
question
In long-run equilibrium, the competitive firm has no incentive to change output, plant size, or enter or leave the industry.
answer
...
question
In long-run equilibrium, a competitive firm produces where short-run and long-run AC are minimized.
answer
...
question
A permanent increase in the demand for the product of a competitive firm will lead to new entry and temporarily higher profits.
answer
...
question
In long-run equilibrium for a competitive industry, firms make normal profits (zero economic profits).
answer
...
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