Micro economics chapter 11 - Assignment Essays

question

A decreasing cost industry is one in which firms experience __ costs as their industry __

answer

a) higher;contracts
c) lower;expands

question

An industry whose average total cost curve shifts upward as the industry expands and shifts downward as the industry contracts is known as

answer

An increasing cost industry

question

_________ efficiency means that goods are produced in the least costly way.

answer

productive

question

A constant cost industry is one where __ or __ will not affect resource prices and production cost

answer

Expansion; contraction

question

The shape of the long run supply curve for a constant cost industry can best be described as

answer

flat

question

________ efficiency means that resources are distributed among firms and industries to yield a mix of products and services that is most wanted by society.

answer

allocative

question

There is no incentive for firms to enter or leave an industry in the long run when

answer

MR=MC
Price equals minACT
Firms earn a normal profit

question

Which of the following describes producer surplus

answer

It's the difference between the minimum prices that producers are willing to accept for a product and the market price of the product

question

In purely competitive markets efficiently can be temporally disrupted and then restored by changes in

answer

Consumer tastes
Resources supplies
Technological change

question

True or false: efficiency within pure competition can be temporarily disrupted by a change in consumer taste

answer

True

question

Competition reflected in the entry and exit of firms eliminates economic profits and losses by adjusting the product __ to equal the minimum ling run average __ cost

answer

Price ; total

question

In pure competition society's resources are allocated efficiently when __

answer

Profit motivated firms produce output to the point where price or marginal revenue (MR) and marginal cost (MC) are equal

question

The green shaded area in the figure represents

answer

Consumer surplus

question

Competition forces firms to select output levels at which average total cost is __

answer

Minimized

question

Strategies attempted by firms for increasing their profits include:

answer

a) lowering production costs through better technology

b) developing a new product that is popular with consumers

d) lowering production costs through improved business organization

question

Competitive market economies strive to generate

answer

allocative efficiency and productive efficiency

question

In __ competition there could potentially be no dynamism and no innovation

answer

pure

question

The entry of new firms to an increasing cost industry will _ resource prices

answer

Increase

question

The supply curve for an increasing cost industry slopes upward because

answer

greater output will be supplied at higher prices

question

Which of the following are considered long run adjustments in an industry

answer

1) the expansion or contraction of plant capacity.
2) the entry and exit of firms

question

Economist maintain that new firms are attracted into an industry due to

answer

Economic profits

question

If there are losses in the long run what adjustment will take place

answer

Firms will exit the industry until losses are eliminated

question

If the demand for a good decrease creating economic losses firms will exit the industry in the long run. As firms exit in the long run industry supply will __ and market will __

answer

Decrease; rise

question

Even if resources prices and technology are the same for all firms which are the first to leave the industry when demand declines

answer

Less skillfully managed firms that tend to incur higher costs
Firms with less productive labor forces or higher transportation costs

question

In the __ run competitive firms have sufficient time either to increase or to decrease their capacities

answer

long

question

All firms in _________ industry share the same basic efficiency characteristics.

answer

purely competitive

question

A competitive firm may realize an economic profit or loss in the __ run but will earn only a normal profit in the __ run

answer

short/long

question

Which of the following conditions may or will cause firms to exit an industry

answer

If price is less than minimum average total cost resulting losses will cause girls to leave the industry
If price is less than minimum average variable cost resulting losses will cause firms to leave the industry

question

If market price initially exceed minimum average total cost the resulting economic profit will attract new firms to the industry which will eventually result in __

answer

Industry expansion increase supply until price equals minimum average total cost

question

Firms will not enter an industry when marginal revenue, marginal cost, price and average total cost are equal because:

answer

economic profit is zero and existing firms are earning only normal profits

question

If a firm's price exceeds the firm's minimum average total cost, then:

answer

d) it will incur an economic profit

question

Which of the following will cause new firms to enter an industry

answer

If market price exceeds minimum average total costs, the resulting economic profits will attract new firms to the industry.

question

Creative __________ captures the idea that the creation of new products and new production methods erodes the market positions of firms committed to existing products and old ways of doing business.

answer

destruction

question

There is no incentive for firms to enter or exit the industry in the long run when

answer

MR=MC
Price equals minATC
Firms earn a normal profit

question

In the long run a purely competitive firm attains equilibrium when __

answer

Price and marginal cost equal minimum of average total cost

question

In pure competition productive efficiency is attained when price __ minimum average total cost

answer

equals

question

Consumer benefit from productive efficiency by paying the __ product price possible Under the prevailing technology and cost conditions causing firms to earn only _ profit

answer

Lowest; a normal

question

Allocative efficiency is achieved when it is impossible to obtain any net gains for society by simply

answer

Altering the combination of goods and services that are produced from society's limited supply of resources

question

When disrupted by changes in the economy, a purely competitive market can restore the efficiency by making the __ equal to the marginal cost

answer

Price

1 of 39

question

A decreasing cost industry is one in which firms experience __ costs as their industry __

answer

a) higher;contracts
c) lower;expands

question

An industry whose average total cost curve shifts upward as the industry expands and shifts downward as the industry contracts is known as

answer

An increasing cost industry

question

_________ efficiency means that goods are produced in the least costly way.

answer

productive

question

A constant cost industry is one where __ or __ will not affect resource prices and production cost

answer

Expansion; contraction

question

The shape of the long run supply curve for a constant cost industry can best be described as

answer

flat

question

________ efficiency means that resources are distributed among firms and industries to yield a mix of products and services that is most wanted by society.

answer

allocative

question

There is no incentive for firms to enter or leave an industry in the long run when

answer

MR=MC
Price equals minACT
Firms earn a normal profit

question

Which of the following describes producer surplus

answer

It's the difference between the minimum prices that producers are willing to accept for a product and the market price of the product

question

In purely competitive markets efficiently can be temporally disrupted and then restored by changes in

answer

Consumer tastes
Resources supplies
Technological change

question

True or false: efficiency within pure competition can be temporarily disrupted by a change in consumer taste

answer

True

question

Competition reflected in the entry and exit of firms eliminates economic profits and losses by adjusting the product __ to equal the minimum ling run average __ cost

answer

Price ; total

question

In pure competition society's resources are allocated efficiently when __

answer

Profit motivated firms produce output to the point where price or marginal revenue (MR) and marginal cost (MC) are equal

question

The green shaded area in the figure represents

answer

Consumer surplus

question

Competition forces firms to select output levels at which average total cost is __

answer

Minimized

question

Strategies attempted by firms for increasing their profits include:

answer

a) lowering production costs through better technology

b) developing a new product that is popular with consumers

d) lowering production costs through improved business organization

question

Competitive market economies strive to generate

answer

allocative efficiency and productive efficiency

question

In __ competition there could potentially be no dynamism and no innovation

answer

pure

question

The entry of new firms to an increasing cost industry will _ resource prices

answer

Increase

question

The supply curve for an increasing cost industry slopes upward because

answer

greater output will be supplied at higher prices

question

Which of the following are considered long run adjustments in an industry

answer

1) the expansion or contraction of plant capacity.
2) the entry and exit of firms

question

Economist maintain that new firms are attracted into an industry due to

answer

Economic profits

question

If there are losses in the long run what adjustment will take place

answer

Firms will exit the industry until losses are eliminated

question

If the demand for a good decrease creating economic losses firms will exit the industry in the long run. As firms exit in the long run industry supply will __ and market will __

answer

Decrease; rise

question

Even if resources prices and technology are the same for all firms which are the first to leave the industry when demand declines

answer

Less skillfully managed firms that tend to incur higher costs
Firms with less productive labor forces or higher transportation costs

question

In the __ run competitive firms have sufficient time either to increase or to decrease their capacities

answer

long

question

All firms in _________ industry share the same basic efficiency characteristics.

answer

purely competitive

question

A competitive firm may realize an economic profit or loss in the __ run but will earn only a normal profit in the __ run

answer

short/long

question

Which of the following conditions may or will cause firms to exit an industry

answer

question

If market price initially exceed minimum average total cost the resulting economic profit will attract new firms to the industry which will eventually result in __

answer

Industry expansion increase supply until price equals minimum average total cost

question

Firms will not enter an industry when marginal revenue, marginal cost, price and average total cost are equal because:

answer

economic profit is zero and existing firms are earning only normal profits

question

If a firm's price exceeds the firm's minimum average total cost, then:

answer

d) it will incur an economic profit

question

Which of the following will cause new firms to enter an industry

answer

If market price exceeds minimum average total costs, the resulting economic profits will attract new firms to the industry.

question

Creative __________ captures the idea that the creation of new products and new production methods erodes the market positions of firms committed to existing products and old ways of doing business.

answer

destruction

question

There is no incentive for firms to enter or exit the industry in the long run when

answer

MR=MC
Price equals minATC
Firms earn a normal profit

question

In the long run a purely competitive firm attains equilibrium when __

answer

Price and marginal cost equal minimum of average total cost

question

In pure competition productive efficiency is attained when price __ minimum average total cost

answer

equals

question

Consumer benefit from productive efficiency by paying the __ product price possible Under the prevailing technology and cost conditions causing firms to earn only _ profit

answer

Lowest; a normal

question

Allocative efficiency is achieved when it is impossible to obtain any net gains for society by simply

answer

Altering the combination of goods and services that are produced from society's limited supply of resources

question

When disrupted by changes in the economy, a purely competitive market can restore the efficiency by making the __ equal to the marginal cost

answer

Price

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