Microeconomics - Assignment Essays

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enter an industry, which shifts the market supply curve to the right and decreases market price.

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If there are weak barriers to entry, the existence of positive economic profits induces firms to:

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$17

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If a monopolist increases output from 14 to 15 by lowering its price from $32 to $31, marginal revenue is:

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Decides what level of output will maximize profits.

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In making a production decision, an entrepreneur

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Total cost.

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The sum of fixed cost and variable cost at any rate of output is

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price-taker

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A firm is a ______ when it can sell as much as it wants at the market price, but nothing at a higher price.

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0AHE

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Refer to the above graph. At the profit-maximizing level of output, the firm's total revenue is the area:

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$1,250

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In the short run the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs are:

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answer

Refer to the graph above of a perfectly competitive profit-maximizing firm. The firm will shutdown if price is below:

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all inputs are variable

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In the long run:

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oligopolistic

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Suppose there are only four airlines that service the air route between two cities. If there is a barrier to entering the market (such as a limited number of gates), the market is best characterized as:

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Marginal cost equals price

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Perfect competition produces allocative efficiency because:

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...

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Normal profit

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0AHE

answer

Refer to the above graph. At the profit-maximizing level of output, the firm's total revenue is the area:

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answer

Refer to the graph above of a perfectly competitive profit-maximizing firm. The firm will shutdown if price is below

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all inputs are variable

answer

In the long run:

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oligopolistic.

answer

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Marginal cost equals price

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Perfect competition produces allocative efficiency because:

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Covers the full opportunity cost of the resources used by the firm

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Normal profit

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this market is in long-run equilibrium because the firm is earning zero economic profits

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Refer to the graphs above, which show a perfectly competitive market and firm. If market demand is D0

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$55,000.

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Tom's annual salary as an assistant store manager is $30,000 and he owns a building that rents for $10,000 yearly. One day, after deciding to be his own boss, he quits his job, evicts his tenants, and uses his building and his time to establish a bicycle repair shop. He also spends $15,000 in cash to pay for the costs involved with running the business for the year. What are Tom's economic costs?

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Not change output.

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If a perfectly competitive firm is producing at its profit-maximizing output in the short run and fixed costs decline, the firm should

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900 units of output

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Refer to the graph above. The SATC curves are potential short run average total cost curves. Decreasing returns to scale begin at:

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Less output and charge a higher price

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When compared with the perfectly competitive industry with identical costs of production, a monopolist will produce:

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$0.

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Suppose a firm has an annual budget of $200,000 in wages and salaries, $75,000 in materials, $30,000 in new equipment, $20,000 in rented property, and $35,000 in interest costs on capital. The owner/manager does not choose to pay himself, but he could receive income of $90,000 by working elsewhere. The firm earns revenues of $360,000 per year. What is the accounting profit for the firm described above?

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answer

Refer to the graph shown. The supply curve for the perfectly competitive firm is best represented by the segment:

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P > MC

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Allocative inefficiency due to monopoly occurs because at the profit maximizing output:

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Total profit

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The difference between the total revenue and total cost curves at a given output is equal to

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$15.

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The Lucky Cat Corporation finds its fixed costs are $40. Its variable costs change with output as shown in the accompanying table. Use this information to answer the following two questions.

Refer to the above information. The marginal cost of the third unit of output is:

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$35.

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1 unit of output

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Refer to Table 7.1. What is the marginal physical product of the 6th worker

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fifth

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Refer to Table 7.1. Diminishing returns are first observed when the ______ worker is added.

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2 units of output.

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Refer to the table above. Assume that the firm is operating. If the market price is $6, a perfectly competitive profit-maximizing firm will produce:

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Economies of scale must exist.

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When the size of a factory (and all its associated inputs) doubles and, as a result, output more than doubles,

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Supply will decrease, price will increase

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Refer to the above graphs for a competitive market in the short run. What will happen in the long run to industry supply and the equilibrium price of the product?

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a monopoly.

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A market structure in which one firm makes up the entire market is

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The market demand curve is perfectly inelastic and thus vertical

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A perfectly competitive market has all of the following characteristics except for which of the following

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Q3 and have zero economic profits

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Refer to the graph above of a perfectly competitive firm. If the market price is P2, the firm will produce

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DABC

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Which area on the graph represents economic profits?

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Neither allocative nor productive efficiency

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In an oligopolistic market there is likely to be:

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the four largest firms account for 80 percent of total sales.

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If the four-firm concentration ratio for industry X is 80

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The demand curve for a perfectly competitive firm is perfectly elastic, but the demand curve for a perfectly competitive industry is down-sloping.

answer

Which of the following statements is correct?

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$8; 30 units

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This firm will set a price and output equal to: _____

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Can easily enter or exit the industry

answer

In a perfectly competitive industry, each firm:

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Variable costs

answer

Refer to the above graph. If the firm is producing at Q1, the area 0BEQ1 represents:

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Average total cost

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Refer to the above graph. If the firm is producing at Q1, the distance 0A represents:

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P = MC = ATC minimum

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In long-run equilibrium a perfectly competitive firm will operate where

1 of 46

question

enter an industry, which shifts the market supply curve to the right and decreases market price.

answer

If there are weak barriers to entry, the existence of positive economic profits induces firms to:

question

$17

answer

If a monopolist increases output from 14 to 15 by lowering its price from $32 to $31, marginal revenue is:

question

Decides what level of output will maximize profits.

answer

In making a production decision, an entrepreneur

question

Total cost.

answer

The sum of fixed cost and variable cost at any rate of output is

question

price-taker

answer

A firm is a ______ when it can sell as much as it wants at the market price, but nothing at a higher price.

question

0AHE

answer

Refer to the above graph. At the profit-maximizing level of output, the firm's total revenue is the area:

question

$1,250

answer

In the short run the Sure-Screen T-Shirt Company is producing 500 units of output. Its average variable costs are $2.00 and its average fixed costs are $.50. The firm's total costs are:

question

answer

Refer to the graph above of a perfectly competitive profit-maximizing firm. The firm will shutdown if price is below:

question

all inputs are variable

answer

In the long run:

question

oligopolistic

answer

question

Marginal cost equals price

answer

Perfect competition produces allocative efficiency because:

question

...

answer

Normal profit

question

0AHE

answer

Refer to the above graph. At the profit-maximizing level of output, the firm's total revenue is the area:

question

answer

Refer to the graph above of a perfectly competitive profit-maximizing firm. The firm will shutdown if price is below

question

all inputs are variable

answer

In the long run:

question

oligopolistic.

answer

question

Marginal cost equals price

answer

Perfect competition produces allocative efficiency because:

question

Covers the full opportunity cost of the resources used by the firm

answer

Normal profit

question

this market is in long-run equilibrium because the firm is earning zero economic profits

answer

Refer to the graphs above, which show a perfectly competitive market and firm. If market demand is D0

question

$55,000.

answer

question

Not change output.

answer

If a perfectly competitive firm is producing at its profit-maximizing output in the short run and fixed costs decline, the firm should

question

900 units of output

answer

Refer to the graph above. The SATC curves are potential short run average total cost curves. Decreasing returns to scale begin at:

question

Less output and charge a higher price

answer

When compared with the perfectly competitive industry with identical costs of production, a monopolist will produce:

question

$0.

answer

question

answer

Refer to the graph shown. The supply curve for the perfectly competitive firm is best represented by the segment:

question

P > MC

answer

Allocative inefficiency due to monopoly occurs because at the profit maximizing output:

question

Total profit

answer

The difference between the total revenue and total cost curves at a given output is equal to

question

$15.

answer

question

$35.

answer

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1 unit of output

answer

Refer to Table 7.1. What is the marginal physical product of the 6th worker

question

fifth

answer

Refer to Table 7.1. Diminishing returns are first observed when the ______ worker is added.

question

2 units of output.

answer

Refer to the table above. Assume that the firm is operating. If the market price is $6, a perfectly competitive profit-maximizing firm will produce:

question

Economies of scale must exist.

answer

When the size of a factory (and all its associated inputs) doubles and, as a result, output more than doubles,

question

Supply will decrease, price will increase

answer

Refer to the above graphs for a competitive market in the short run. What will happen in the long run to industry supply and the equilibrium price of the product?

question

a monopoly.

answer

A market structure in which one firm makes up the entire market is

question

The market demand curve is perfectly inelastic and thus vertical

answer

A perfectly competitive market has all of the following characteristics except for which of the following

question

Q3 and have zero economic profits

answer

Refer to the graph above of a perfectly competitive firm. If the market price is P2, the firm will produce

question

DABC

answer

Which area on the graph represents economic profits?

question

Neither allocative nor productive efficiency

answer

In an oligopolistic market there is likely to be:

question

the four largest firms account for 80 percent of total sales.

answer

If the four-firm concentration ratio for industry X is 80

question

The demand curve for a perfectly competitive firm is perfectly elastic, but the demand curve for a perfectly competitive industry is down-sloping.

answer

Which of the following statements is correct?

question

$8; 30 units

answer

This firm will set a price and output equal to: _____

question

Can easily enter or exit the industry

answer

In a perfectly competitive industry, each firm:

question

Variable costs

answer

Refer to the above graph. If the firm is producing at Q1, the area 0BEQ1 represents:

question

Average total cost

answer

Refer to the above graph. If the firm is producing at Q1, the distance 0A represents:

question

P = MC = ATC minimum

answer

In long-run equilibrium a perfectly competitive firm will operate where

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