mana chap 13 - Assignment Essays

question

Marginal utility is measured as

utility per unit of production.
extra output divided by extra utility.
output of a good or service divided by price.
extra utility from each additional good consumed.

answer

extra utility from each additional good consumed.

question

If marginal utility is positive but decreasing, total utility is

decreasing.
negative.
increasing.
constant.

answer

increasing

question

Refer to the above table. If the price of a hamburger is $2, the price of a Broadway Show is $60, and the consumer has $190, what is the consumer optimum?

4 hamburgers and 2 Broadway shows
5 hamburgers and 3 Broadway shows
6 hamburgers and 0 Broadway shows
0 hamburgers and 6 Broadway show

answer

5 hamburgers and 3 Broadway shows

question

A rational consumer will NEVER purchase a product when its

marginal utility is negative.
total utility is increasing at a decreasing rate.
marginal utility is decreasing.
total utility is decreasing at an increasing rate

answer

marginal utility is negative

question

John has just eaten another potato chip and his total utility increased. This means that John's marginal utility for this additional potato chip is

positive
negative
zero
not determinable without more information

answer

positive

question

Which of the following statements is FALSE?

Included in the firm's short-run production function are both fixed and variable inputs.
An efficient firm can obtain more output than the production function shows.
The production function shows the technical relationship between a firm's inputs and outputs.
The production function presents the technically efficient methods of combining inputs to produce output.

answer

An efficient firm can obtain more output than the production function shows

question

The law of diminishing marginal product

holds in the short run and the long run because as you increase the amount of variable inputs eventually the increases in output will decrease.
does not hold in the short run because of fixed costs.
does not hold in the long run because there are no fixed inputs in the long run.
holds in the short and long run because of economies to scale

answer

does not hold in the long run because there are no fixed inputs in the long run.

question

Suppose a firm doubles its output in the long run. At the same time the unit cost of production remains unchanged. We can conclude that the firm is
exploiting the economies of scale available to it.
facing constant returns to scale.
facing diseconomies of scale.
not using the available technology efficiently

answer

facing constant returns to scale

question

Under perfect competition, a firm that sets its price slightly above the market price would
make lower profits than the other firms, but the amount would depend on the elasticity of demand.
make a normal rate of return, but on reduced revenues.
lose all of its customers.
earn higher profits as long as the other firms continued to charge the market price.

answer

lose all of its customers

question

Which of the following statements is NOT true for a perfectly competitive firm?
A firm's demand curve is horizontal.
The firm can influence its demand curve by advertising its product.
The firm's demand curve is perfectly elastic.
The market demand and supply curves determine the market price.

answer

the firm can influence its demand curve by advertising its product

question

Under perfect competition, the demand curve facing the firm is determined by
the intersection of the industry demand and supply curves.
the tastes and preferences of consumers.
utility maximizing behavior on the part of consumers.
the willingness of the firm to supply the good.

answer

the intersection of the industry demand and supply curves

question

In a long-run equilibrium, a perfectly competitive firm's average total cost is
minimized.
maximized.
zero.
equal to average fixed cost.

answer

minimized

question

The demand curve faced by a pure monopolist
is the same as its marginal revenue curve.
is perfectly inelastic.
lies below the marginal revenue curve.
is the market demand curve

answer

is the market demand curve

question

For a firm facing a downward sloping demand curve, marginal revenue
is at a minimum at the midpoint of the demand curve.
is greater at higher prices than at lower prices.
increases each time prices are lowered.
falls each time prices are raised.

answer

is greater at higher prices than at lower prices

question

The total utility of consuming 6 units of a good is 255. The marginal utility of the 6th unit is 45 and the marginal utility of the 5th unit is 60. The total utility of consuming 5 units of the good is
300.
150.
210.
195

answer

210

question

A perfectly competitive firm faces a market clearing price of $150 per unit. Average variable costs are at the minimum value of $200 per unit at an output rate of 100 units. Marginal cost equals $150 per unit at an output rate of 75 units. It can be concluded that the short-run profit-maximizing output rate is

75 units, at which the firm earns zero economic profits per unit sold.
75 units, at which the firm earns $50 in economic profits per unit sold.
100 units, because marginal cost equals average variable costs.
0 units, because price is less than average variable costs.

answer

0 units, because price is less than average variable costs

question

A firm is currently producing at the rate of output at which total revenues just cover its total variable costs. If demand falls, the firm should
lower both price and its rate of output.
shut down.
increase its rate of output to make up for the lower price.
not change its rate of output because it is still covering its variable costs.

answer

shut down

question

A constant-cost industry is one in which
output increases lead to productivity gains.
the marginal product of labor is constant.
there is no change in long-run per-unit costs, even as output varies.
each firm has a horizontal long-run average cost curve.

answer

there is no change in long-run per unit costs, even as output varies

question

In a perfectly competitive market, if P < MC, then
too little output is being produced.
too much output is being produced.
production is efficient, as the firm is earning profits.
the firm is paying a price for resources that is too high.

answer

too much output is being produced

question

A firm will practice price discrimination when it believes that by doing so it will be able to increase total
sales.
revenue.
profits.
production.

answer

profits

question

A monopolist charges a price that is ________ and produces ________ than a perfect competitor.
lower; less
higher; less
higher; more
lower; more

answer

higher; more

question

John has just eaten another potato chip and his total utility increased. This means that John's marginal utility for this additional potato chip is
positive.
negative.
zero.
not determinable without more information.

answer

positive

question

What happens at a firm's point of saturation?
For the first time, hiring an additional worker decreases total product.
Workers cannot take on any additional tasks without working overtime hours.
The market for a firm's output has been saturated and sales fall to zero.
The firm's total costs exceed its revenues.

answer

for the first time, hiring an additional worker decreases total product

question

When the average physical product is rising
total cost is falling.
average total cost is increasing.
average variable cost is falling.
marginal cost is always rising.

answer

average variable cost is falling

question

Suppose a perfectly competitive firm can produce 20,000 bushels of corn a year at an output at which marginal cost equals marginal revenue. The market price of corn per bushel is $2.00. The firm's total costs per year are $50,000 and fixed costs per year are $25,000. In the short run, this firm should

shut down.
continue producing until the price of corn increases.
produce 20,000 bushels of corn because, although they are losing money, they are losing less than if they shut down.
produce 40,000 bushels to try to increase economic profit.

answer

produce 20,000 bushels of corn because, although they are losing money, they are losing less than if they shut down

question

In a perfectly competitive market in which all firms are maximizing their economic profits, the demand and supply curves intersect at a price of $8. From this we know that each

firm's average total cost of producing the good is $8.
firm's average variable cost of producing the good is $8.
firm's marginal cost of producing the good is $8.
firm is earning positive economic profits at a price of $8 or more.

answer

firm's marginal cost of producing the good is $8

question

When the marginal cost curve of the monopolist shifts upward, there will be

an increase in both price and quantity.
an increase in price but a decrease in quantity.
a decrease in price and in marginal revenue.
a decrease in quantity and a decrease in marginal revenue.

answer

an increase in price but a decrease in quantity

question

A monopolist is producing at an output level at which MR = $9 and MC = $8. It could increase profits

by increasing both output and price.
by reducing output and by increasing price.
by reducing both output and price.
by increasing output and by reducing price.

answer

by increasing output and by reducing price

question

A price discriminating monopolist will
charge a lower price to those consumers who have more elastic demand.
charge a higher price to those consumers who have more inelastic demand.
charge more to those consumers who have more substitute goods.
charge the same price to all consumers

answer

charge a lower price to those consumers who have more elastic demand.

question

Monopolies are inefficient because
they price discriminate.
they want to maximize profits.
they always make above-normal profits.
price exceeds marginal cost.

answer

price exceeds marginal cost

question

Which of the following is NOT a reason why a firm may experience economies of scale?
productive specialization
dimensional factors
improved productive equipment
increased levels of management

answer

increased levels of management

question

For a perfectly competitive firm, profit maximization occurs when
marginal revenue equals average total cost.
marginal revenue equals marginal cost.
marginal cost is equal to average total cost.
average total cost is at its minimum

answer

marginal revenue equals marginal cost

question

Under perfect competition, the firm must decide

the best price to charge for its product.
the best rate of output it should produce.
the optimal level of advertising to engage in.
the optimal level of quality and the packaging that will maximize profits

answer

the best rate of output it should produce

question

Shortly after the turn of the century, U.S. Steel owned most of the iron ore reserves in the country. This is an example of

monopoly due to government restrictions.
a barrier to entry from owning an important resource.
a barrier to entry from scale economies.
monopoly due to governmental entry restrictions.

answer

a barrier to entry from owning an important resource

question

A monopolist maximizes profits by finding

the rate of output where marginal revenue equals marginal cost.
the rate of output where price equals marginal cost.
the price where price exceeds marginal revenue by that largest amount.
the price where average revenue and marginal cost are equal

answer

the rate of output where marginal revenue equals marginal cost

question

Which of the following is TRUE?

Monopoly results in a higher quantity of output being sold compared with perfect competition.
Price discrimination occurs when there are differences in prices that reflect differences in marginal cost.
Charging all customers the same price when costs vary can actually be a case of price discrimination.
Price discrimination guarantees that the monopolist will make a profit.

answer

Charging all customers the same price when costs vary can actually be a case of price discrimination.

question

The social cost attached to monopolies is reflected by the fact that

monopolies produce more output than consumers desire to buy.
consumers pay prices that exceed the marginal cost of production.
the demand for a monopolist's product is always lower than the demand for the products of perfectly competitive firms.
consumers are always willing to pay lower prices for a monopolist's product than for the products of perfectly competitive firms.

answer

consumers pay prices that exceed the marginal cost of production

question

An important difference between a perfectly competitive firm and a monopolist is
the size of the firms.
the shape of the demand curve each faces.
the goals of the owners of the firms.
a monopolist normally produces a service, while a perfect competitor normally produces a good.

answer

the shape of the demand curve each faces

question

A profit-maximizing monopolist will receive zero profits when

the average total cost curve lies above the demand curve for all possible rates of output.
the average total cost curve is tangent to the demand curve at the profit maximizing price.
marginal revenue, marginal cost, and average total cost are all equal.
a second firm enters the industry.

answer

the average total cost curve is tangent to the demand curve at the profit maximizing price.

question

Under a monopoly, resources are misallocated such that

too few resources are used in other industries, and too many are used by the monopoly.
too few resources are used by the monopoly, and too many are used elsewhere.
resources are being used as efficiently as possible only by the monopoly.
consumers are being forced to pay a price below the MC of the monopolist.

answer

too few resources are used by the monopoly, and too many are used elsewhere.

question

When comparing perfect competition and monopoly, a major assumption made is that

the monopolist faces a downward sloping demand curve.
consumers only care about the price of the good and not whether the seller is a monopoly or not.
the costs of production are the same under monopoly as under perfect competition.
the monopolist can make an above normal rate of return.

answer

the costs of production are the same under monopoly as under perfect competition.

question

Average fixed costs will

rise as output rises.
fall then rise as output rises.
rise then fall as output rises.
fall as output rises.

answer

fall as output rises

question

The firm's short-run costs contain

only variable costs.
only fixed costs.
both variable and fixed costs.
only opportunity costs

answer

both variable and fixed costs

question

Diseconomies to scale are illustrated by

a downward sloping long-run average cost curve.
a horizontal long-run average cost curve.
an upward sloping long-run average cost curve.
a long-run average cost curve that is shaped like an upside down U.

answer

an upward sloping long-run average cost curve

question

The minimum possible short-run average costs are equal to long-run average costs when

the plant is producing at its short-run minimum point.
short-run and long-run costs are declining.
the long-run curve is at a minimum point.
production is at any point on the LAC curve.

answer

the long-run curve is at a minimum point

question

A perfectly competitive industry's market price is found by

finding the point on the market demand curve where the largest number of units will be purchased.
locating the intersection of the market demand and market supply curves.
the horizontal summation of all the industry firms' individual supply curves.
identifying the price at which each firm realizes its largest economic profit.

answer

locating the intersection of the market demand and market supply curves.

question

Which of the following is NOT true for a perfectly competitive firm in the long run?
MR = MC
MC > LAC
Price = MC
SAC = LAC

answer

MC > LAC

question

If a monopolist wishes to increase its output and quantity sold

it must reduce its price, so its marginal revenue is greater than its price.
it must reduce its price, so its marginal revenue is less than its price.
it must raise its price, so its marginal revenue is greater than its price.
it must raise its price, so its marginal revenue is less than its price.

answer

it must reduce its price, so its marginal revenue is less than its price.

question

Compared to an efficient perfectly competitive industry, the monopolist will

produce less output at a higher total cost.
produce less output and charge a higher price.
produce more output at a higher price and higher profit.
produce more output at a lower price.

answer

produce less output and charge a higher price.

question

The marginal productivity of labor will eventually decrease as more workers are employed because

average product is increasing.
total product is decreasing.
the amount of capital will also be increasing.
on the average each worker will have fewer inputs to work with.

answer

on the average each worker will have fewer inputs to work with.

question

Which of the following statements is correct?
The demand curve of the perfectly competitive industry is elastic as are the demand curves facing the individual firms.
The market demand curve of perfect competition is inelastic because the individual consumers are buying a homogeneous product.
The market demand curve of the perfectly competitive industry is downward sloping while the demand curve of an individual firm is horizontal with a height equal to the product price.
The market demand curve of the perfectly competitive industry is downward sloping, so the demand curves of the individual firms are also downward sloping.

answer

The market demand curve of the perfectly competitive industry is downward sloping while the demand curve of an individual firm is horizontal with a height equal to the product price.

question

The owner of a perfectly competitive firm that is earning economic losses in the short run

should alter the rate of output in order to increase profitability.
should cut his own salary in order to reach the break-even point.
is actually losing more than he thinks because not all of the implicit costs have been considered.
is earning less than he would if he worked for someone else

answer

is earning less than he would if he worked for someone else

question

Profits and losses are true signals because they

convey information about true long-run profits.
cannot be misinterpreted by entrepreneurs.
convey information about where to place resources and reward people who act on the information.
reward people who make profits with even more profits and punish those who make losses with even more losses.

answer

convey information about where to place resources and reward people who act on the information.

question

If there are no barriers to entry into an industry

short-run economic profits must be zero.
long-run economic profits must be zero.
both short-run and long-run economic profits must be zero.
short-run and long-run profits must still be positive.

answer

long-run economic profits must be zero.

question

A monopolist faces

a perfectly elastic demand curve.
a perfectly inelastic demand curve.
the market demand curve.
a two-tiered demand curve.

answer

the market demand curve.

question

The demand curve faced by a pure monopolist

is the same as its marginal revenue curve.
is perfectly inelastic.
lies below the marginal revenue curve.
is the market demand curve.

answer

is the market demand curve.

question

answer

by increasing output and by reducing price.

question

For a firm in a perfectly competitive industry, the demand curve for its own product is
downward sloping.
vertical.
always above the marginal revenue curve.
the same as the marginal revenue curve.

answer

the same as the marginal revenue curve.

question

Perfectly competitive markets are efficient because
they always reach equilibrium.
firms in the market are price takers.
the cost to society for producing the goods is exactly equal to the value that society places on the good.
the long run equilibrium assures that the prices of resources will not increase.

answer

the cost to society for producing the goods is exactly equal to the value that society places on the good.

question

The long-run industry supply curve in a decreasing-cost, perfectly competitive industry is
negatively sloped.
perfectly elastic.
positively sloped.
perfectly inelastic.

answer

negatively sloped.

question

The demand curve faced by the monopolist
is perfectly elastic.
is perfectly inelastic.
slopes downward.
slopes upward.

answer

slopes downward

question

Which of the following statements concerning a monopolist is FALSE?
A monopolist will produce at which MR = MC.
For a monopolist, marginal revenue is less than price.
A monopolist will charge the highest price at which any individual will purchase the product.
A monopolist will shut down if price is less than average variable cost.

answer

A monopolist will charge the highest price at which any individual will purchase the product.

question

As an individual consumes more of a particular commodity, the total level of utility derived from that consumption usually
increases at a constant rate.
increases at an increasing rate.
increases at a decreasing rate.
decreases at an increasing rate.

answer

increases at a decreasing rate

question

If a firm is producing an output rate at which marginal cost is equal price, the firm
is maximizing profits.
should increase its output level.
should reduce its output level.
will not be covering its fixed cost.

answer

is maximizing profits.

question

A monopolist
can charge whatever price it wants because it is the only firm producing the good.
can usually keep price equal to marginal revenue by lowering the price on the last unit sold only.
faces a demand curve that is more elastic than the demand curve for the industry.
is constrained in its pricing decisions by the demand curve it faces.

answer

is constrained in its pricing decisions by the demand curve it faces.

question

The price elasticity of demand for a monopolist
is infinite since the monopolist is the only firm in the market.
decreases as more competition occurs in the market.
increases as similar products enter the market.
is undefined due to the lack of competition.

answer

increases as similar products enter the market.

question

When the marginal cost curve of the monopolist shifts upward, there will be
an increase in both price and quantity.
an increase in price but a decrease in quantity.
a decrease in price and in marginal revenue.
a decrease in quantity and a decrease in marginal revenue.

answer

an increase in price but a decrease in quantity.

question

A monopolist would not be able to make a positive profit at any price output combination when

marginal cost is less than average total cost for one more unit of output.
the average variable cost curve is everywhere above the marginal revenue curve.
the minimum point of the average total cost curve lies to the right of the minimum of the average variable cost curve.
the average total cost curve is everywhere above the demand curve.

answer

the average total cost curve is everywhere above the demand curve.

question

In a graph showing the short-run cost curves, the one curve which declines continuously as we expand output is called
the average fixed cost curve.
the average variable cost curve.
the average total cost curve.
the marginal cost curve.

answer

the average fixed cost curve.

question

The planning curve is the
long-run average cost curve.
production function.
short-run marginal cost curve.
short-run average cost curve.

answer

long-run average cost curve.

question

If the wage rate increases and firms in a perfectly competitive industry are hiring labor, then
the firms will quit using labor.
profits will increase.
market supply will decrease.
market price will decrease.

answer

market supply will decrease.

question

Suppose a perfectly competitive industry is in long-run equilibrium. If a decrease in demand leads to a lower long-run price, we know that
this is a decreasing-cost industry.
this is an increasing-cost industry.
some firms will be losing money in the long run.
after further adjustments, price will rise to its original level.

answer

this is an increasing-cost industry.

question

A monopolist faces a demand curve that
is perfectly horizontal at the market price.
is below the marginal revenue curve.
is downward sloping.
coincides with the industry supply.

answer

is downward sloping.

question

At an output at which ATC is greater than MC
the ATC curve is downward sloping.
the ATC curve is upward sloping.
the AFC curve is upward sloping.
the AVC curve is upward sloping.

answer

the ATC curve is downward sloping.

question

For a firm in a perfectly competitive industry

the demand curve is unitary elastic throughout.
marginal revenue and product price are equal at every level of output.
the price elasticity of demand is zero.
more output can be sold only if the firm unilaterally lowers its product price.

answer

marginal revenue and product price are equal at every level of output.

question

A perfectly competitive industry's short-run supply curve is best described as

the upward sloping portion of the industry's marginal cost curve.
horizontal.
perfectly inelastic.
the horizontal summation of the individual firms' supply curves.

answer

the horizontal summation of the individual firms' supply curves.

question

Under perfect competition, the demand curve facing the firm is determined by

the intersection of the industry demand and supply curves.
the tastes and preferences of consumers.
utility maximizing behavior on the part of consumers.
the willingness of the firm to supply the good.

answer

the intersection of the industry demand and supply curves.

question

A major difference between a monopolist and a perfectly competitive firm is that

the monopolist is certain to earn economic profits.
the monopolist's marginal revenue curve lies below its demand curve.
the monopolist engages in marginal cost pricing.
the monopolist charges the highest possible price that he can.

answer

the monopolist's marginal revenue curve lies below its demand curve.

question

The price of a hamburger is $1 and the price of a movie is $6 and the consumer has $14. A consumer has purchased 2 hamburgers and 2 movies, receiving 20 units of utility for the second hamburger and 100 units of utility for the second movie. The set of goods

is an optimum since the entire income is spent and the marginal utility per dollar spent is the same for the last unit of each good.
is an optimum since the entire income is spent and total utility is maximized.
is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies and the consumer is not spending all of his income.
is not an optimum because the marginal utility for each good is not equal.

answer

is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies and the consumer is not spending all of his income.

question

In a map showing short-run cost functions, one curve begins at the origin and rises as output expands. It is called the

the marginal cost curve.
the total fixed cost curve.
the total cost curve.
the total variable cost curve.

answer

the total variable cost curve.

question

Which of the following is TRUE for a firm in the long run?

Variable costs will initially increase and then decrease.
The law of diminishing marginal product holds.
All costs are variable costs.
Variable costs will equal marginal cost at all output levels.

answer

All costs are variable costs.

question

The rising portion of a perfectly competitive firm's marginal cost curve, above the intersection with AVC, is its
demand curve.
economic profit.
supply curve.
accounting profit.

answer

supply curve.

question

Suppose a perfectly competitive industry is in long-run equilibrium. If a decrease in demand leads to a higher long-run price, we know that

this is a decreasing-cost industry.
this is an increasing-cost industry.
some firms will be losing money in the long run.
after further adjustments, price will fall to its original level.

answer

this is a decreasing-cost industry.

question

A monopoly misallocates resources when it

restricts output so that the marginal benefit of the last unit sold exceeds the marginal social cost of producing the good.
makes an above-normal profit.
sells the same product to different groups of customers at different prices.
exploits scale economies.

answer

restricts output so that the marginal benefit of the last unit sold exceeds the marginal social cost of producing the good.

1 of 84

question

Marginal utility is measured as

utility per unit of production.
extra output divided by extra utility.
output of a good or service divided by price.
extra utility from each additional good consumed.

answer

extra utility from each additional good consumed.

question

If marginal utility is positive but decreasing, total utility is

decreasing.
negative.
increasing.
constant.

answer

increasing

question

answer

5 hamburgers and 3 Broadway shows

question

answer

marginal utility is negative

question

answer

positive

question

answer

An efficient firm can obtain more output than the production function shows

question

answer

does not hold in the long run because there are no fixed inputs in the long run.

question

answer

facing constant returns to scale

question

answer

lose all of its customers

question

answer

the firm can influence its demand curve by advertising its product

question

answer

the intersection of the industry demand and supply curves

question

In a long-run equilibrium, a perfectly competitive firm's average total cost is
minimized.
maximized.
zero.
equal to average fixed cost.

answer

minimized

question

The demand curve faced by a pure monopolist
is the same as its marginal revenue curve.
is perfectly inelastic.
lies below the marginal revenue curve.
is the market demand curve

answer

is the market demand curve

question

answer

is greater at higher prices than at lower prices

question

answer

210

question

answer

0 units, because price is less than average variable costs

question

answer

shut down

question

answer

there is no change in long-run per unit costs, even as output varies

question

answer

too much output is being produced

question

A firm will practice price discrimination when it believes that by doing so it will be able to increase total
sales.
revenue.
profits.
production.

answer

profits

question

A monopolist charges a price that is ________ and produces ________ than a perfect competitor.
lower; less
higher; less
higher; more
lower; more

answer

higher; more

question

answer

positive

question

answer

for the first time, hiring an additional worker decreases total product

question

When the average physical product is rising
total cost is falling.
average total cost is increasing.
average variable cost is falling.
marginal cost is always rising.

answer

average variable cost is falling

question

answer

produce 20,000 bushels of corn because, although they are losing money, they are losing less than if they shut down

question

answer

firm's marginal cost of producing the good is $8

question

answer

an increase in price but a decrease in quantity

question

answer

by increasing output and by reducing price

question

answer

charge a lower price to those consumers who have more elastic demand.

question

Monopolies are inefficient because
they price discriminate.
they want to maximize profits.
they always make above-normal profits.
price exceeds marginal cost.

answer

price exceeds marginal cost

question

Which of the following is NOT a reason why a firm may experience economies of scale?
productive specialization
dimensional factors
improved productive equipment
increased levels of management

answer

increased levels of management

question

answer

marginal revenue equals marginal cost

question

answer

the best rate of output it should produce

question

answer

a barrier to entry from owning an important resource

question

answer

the rate of output where marginal revenue equals marginal cost

question

answer

Charging all customers the same price when costs vary can actually be a case of price discrimination.

question

answer

consumers pay prices that exceed the marginal cost of production

question

answer

the shape of the demand curve each faces

question

answer

the average total cost curve is tangent to the demand curve at the profit maximizing price.

question

answer

too few resources are used by the monopoly, and too many are used elsewhere.

question

answer

the costs of production are the same under monopoly as under perfect competition.

question

Average fixed costs will

rise as output rises.
fall then rise as output rises.
rise then fall as output rises.
fall as output rises.

answer

fall as output rises

question

The firm's short-run costs contain

only variable costs.
only fixed costs.
both variable and fixed costs.
only opportunity costs

answer

both variable and fixed costs

question

answer

an upward sloping long-run average cost curve

question

answer

the long-run curve is at a minimum point

question

answer

locating the intersection of the market demand and market supply curves.

question

Which of the following is NOT true for a perfectly competitive firm in the long run?
MR = MC
MC > LAC
Price = MC
SAC = LAC

answer

MC > LAC

question

answer

it must reduce its price, so its marginal revenue is less than its price.

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produce less output and charge a higher price.

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on the average each worker will have fewer inputs to work with.

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The market demand curve of the perfectly competitive industry is downward sloping while the demand curve of an individual firm is horizontal with a height equal to the product price.

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is earning less than he would if he worked for someone else

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convey information about where to place resources and reward people who act on the information.

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long-run economic profits must be zero.

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A monopolist faces

a perfectly elastic demand curve.
a perfectly inelastic demand curve.
the market demand curve.
a two-tiered demand curve.

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the market demand curve.

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The demand curve faced by a pure monopolist

is the same as its marginal revenue curve.
is perfectly inelastic.
lies below the marginal revenue curve.
is the market demand curve.

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is the market demand curve.

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by increasing output and by reducing price.

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For a firm in a perfectly competitive industry, the demand curve for its own product is
downward sloping.
vertical.
always above the marginal revenue curve.
the same as the marginal revenue curve.

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the same as the marginal revenue curve.

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the cost to society for producing the goods is exactly equal to the value that society places on the good.

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The long-run industry supply curve in a decreasing-cost, perfectly competitive industry is
negatively sloped.
perfectly elastic.
positively sloped.
perfectly inelastic.

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negatively sloped.

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The demand curve faced by the monopolist
is perfectly elastic.
is perfectly inelastic.
slopes downward.
slopes upward.

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slopes downward

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A monopolist will charge the highest price at which any individual will purchase the product.

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increases at a decreasing rate

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is maximizing profits.

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is constrained in its pricing decisions by the demand curve it faces.

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increases as similar products enter the market.

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When the marginal cost curve of the monopolist shifts upward, there will be
an increase in both price and quantity.
an increase in price but a decrease in quantity.
a decrease in price and in marginal revenue.
a decrease in quantity and a decrease in marginal revenue.

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an increase in price but a decrease in quantity.

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the average total cost curve is everywhere above the demand curve.

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the average fixed cost curve.

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The planning curve is the
long-run average cost curve.
production function.
short-run marginal cost curve.
short-run average cost curve.

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long-run average cost curve.

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market supply will decrease.

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this is an increasing-cost industry.

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A monopolist faces a demand curve that
is perfectly horizontal at the market price.
is below the marginal revenue curve.
is downward sloping.
coincides with the industry supply.

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is downward sloping.

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At an output at which ATC is greater than MC
the ATC curve is downward sloping.
the ATC curve is upward sloping.
the AFC curve is upward sloping.
the AVC curve is upward sloping.

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the ATC curve is downward sloping.

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marginal revenue and product price are equal at every level of output.

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the horizontal summation of the individual firms' supply curves.

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Under perfect competition, the demand curve facing the firm is determined by

the intersection of the industry demand and supply curves.
the tastes and preferences of consumers.
utility maximizing behavior on the part of consumers.
the willingness of the firm to supply the good.

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the intersection of the industry demand and supply curves.

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the monopolist's marginal revenue curve lies below its demand curve.

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is not an optimum because the marginal utility per dollar spent is greater for hamburgers than for movies and the consumer is not spending all of his income.

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the total variable cost curve.

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All costs are variable costs.

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The rising portion of a perfectly competitive firm's marginal cost curve, above the intersection with AVC, is its
demand curve.
economic profit.
supply curve.
accounting profit.

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supply curve.

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this is a decreasing-cost industry.

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restricts output so that the marginal benefit of the last unit sold exceeds the marginal social cost of producing the good.

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