question
The difference b/t technology and technological change is that
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technology refers to the process used by a firm to transform inputs into output while technological change is a change in a firms ability to produce a given level of output w/ a given quantity of inputs.
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Which of the following is an example of positive technological change?
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A firm's workers participate in a training program designed to increase the number of surf boards they can produce per day.
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If a producer is not able to expand its plant capacity immediately, it is
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operating in the short run
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Which of the following is an example of a long-run adjustment?
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Walmart builds another supercenter.
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Which of the following is a fixed cost?
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payment to hire a security worker to guard the gate to the factory around the clock.
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Implicit costs can be defined as
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the non-monetary opportunity cost of using the firm's own resources.
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Which of the following would be categorized as an implicit cost?
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not being able to spend your $10,000 savings if you sink the money in your business.
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Golda Rush quit her job as a manager for Home Depot to start her own hair dressing salon, Goldilocks. She gave up a salary of $40,000 per year, invested her savings of $30,000 (which was earning 5 percent interest) and borrowed $10,000 from a close friend, agreeing to pay 5 percent interest per year. In her first year, Golda spent $18,000 to rent a salon, hired a part-time assistant for $12,000 and incurred another $15,000 on equipment and hairdressing material. Based on this information, what is the amount of her implicit costs?
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$41,500
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Which of the following costs will not change as output changes?
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total fixed cost
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Which of the following equations is incorrect?
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ATC = AVC - AFC
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When the average total cost is $16 and the total cost is $800, then the number of units the firm is producing is
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$50
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If the total cost of producing 20 units of output is $1,000 and the average variable cost is $35, what is the firm's average fixed cost at that level of output?
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$15
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If a firm produces 20 units of output and incurs a total cost of $1000 and a variable is $700, calculate the firm's average fixed cost of production if it expands outputs to 25 units
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$12
question
marginal cost is the
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additional cost of producing an additional unit of output
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When a firm produces 50,000 units of output, its total cost equals $6.5 million. When it increases its production to 70,000 units of output, its total cost increases to $9.4 million. Within this range, the marginal cost of an additional unit of output is
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$134.29
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If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $23.23, what will happen to the average cost of production if the 15th unit is produced?
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Average cost will increase
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Which of the following explains why the marginal cost curve has a U shape?
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Initially, the marginal product of labor rises, then falls.
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The marginal product of labor is defined as
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the change in output that a firm produces as a result of hiring one more worker.
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the law of diminishing marginal returns states
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that at some point, adding more of a variable input to a given amount of a fixed input will cause the marginal product of the variable input to decline.
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If, when a firm doubles all its inputs, its average cost of production decreases, then production displays
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economies of scale.
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Which of the following is not a characteristic of a perfectly competitive market structure?
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There are no restrictions on exit of firms.
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A very large number of small sellers who sell identical products imply
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the inability of one seller to influence the price
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Both individual buyers and sellers in perfect competition
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have to take the market price as given
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Which of the following is the best example of a perfectly competitive industry?
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the wheat market
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The demand curve for an individual seller's product in perfect competition is
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horizontal
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If the market price is $40 in a perfectly competitive market, the marginal revenue from selling the fifth unit is
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$40
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Profit is the difference between
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total revenue and total cost
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For a perfectly competitive firm, which of the following is not true at profit max?
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Mkt price is greater than marginal cost
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A perfectly competitive firm earns a profit when price is
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above minimum average total cost
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If a perfectly competitive firm's price is less than its average total cost but greater than its average variable cost, the firm
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is incurring a loss
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If, in a perfectly competitive industry, the mkt price facing a firm is above its average total cost at the output where marginal revenue equals marginal cost, then
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new firms are attracted to the industry
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If a typical firm in a perfectly competitive industry is earning profits, then
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new firms will enter in the long run causing mkt supply to increase, mkt price to fall, and profits to decrease.
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If a typical firm in a perfectly competitive industry is incurring losses, then
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some firms will exit in the long run, causing mkt supply to decrease and mkt price to rise, increasing profits for remaining firms.
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The music streaming industry, where a firm's profitability depends on its interaction with other firm, is an example of
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oligopoly
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An oligopolistic industry is characterized by all of the following except
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firms pursuing aggressive business strategies, independent of rivals strategies.
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An oligopolist differs from a perfect competitor in that
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there are no entry barriers in a perfect competition but there are entry barriers in oligopoly.
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The "discount department stores" industry is highly concentrated. What does this mean?
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a few large stores account for a significant portion of industry sales.
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The fraction of an industry's sales that are accounted for by the firms largest firms is called
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the four-firm concentration ratio
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If an industry is made up of five identical-sized firms, the four-firm concentration ratio is
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80%
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Which of the following is not a shortcoming of the concentration ratio as a measure of the extent of competition in an industry?
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Concentration ratios assign weights to only the four largest firms in an industry.
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Patents, tariffs and quotas are all examples of
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government-imposed barriers
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One reason why, in the last four decades, the # of new auto makers in the world has been very small to those tend to be big in the past is that
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new producers cannot match the economies of scale of existing new automakers.
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The study of how people make decisions in situations where attaining their goals depends on their interactions with others is called
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game theory
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A set of actions that a firm takes to achieve a goal, such as maximizing profits, is called
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a business strategy
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All of the following are characteristics of game theory except
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independence among players
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A dominant strategy
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is one that is the best for a firm, no matter what strategies other firms use.
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A nash equilibrium
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reached when each player chooses the best strategy for himself, given the other strategies chosen by the other players in the group.
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What is the prisoner's dilemma?
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a game in which players act in rational, self-interested ways that leave everyone worse off
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Sequential games are used to analyze
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situations in which one firm acts and other firms respond.
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In a decision tree, the difference b/t a decision node and terminal node is that
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at a decision node a decision must be made, while a terminal node shows the payoff
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