question
increases at a decreasing rate and then at an increasing rate
answer
As output increases, total variable cost
-increases more rapidly than does total cost
-increases continuously at a decreasing rate
-increases at a decreasing rate and then at an increasing rate
- increases at a constant rate
-increases more rapidly than does total cost
-increases continuously at a decreasing rate
-increases at a decreasing rate and then at an increasing rate
- increases at a constant rate
question
false
answer
True or False:
In the long run, a firm can increase its output quantity, but it will be limited by the size of its existing production plant.
In the long run, a firm can increase its output quantity, but it will be limited by the size of its existing production plant.
question
total cost will decrease
answer
A firm with fixed costs produces at the lowest point on its U-shaped average variable cost curve. If it raises output by 1 unit, then average
-fixed cost will increase
-total cost will decrease
-fixed cost will necessarily be below average variable cost
-total cost will be less than average variable cost
-fixed cost will increase
-total cost will decrease
-fixed cost will necessarily be below average variable cost
-total cost will be less than average variable cost
question
normal profits
answer
these profits are considered an implicit cost by economists
question
...
answer
Economic profits are calculated by subtracting _____________ from __________.
question
average fixed cost
answer
_____________ declines continually as output increases
question
marginal product is decreasing
answer
the firm's short-run marginal-cost curve is increasing when ...
question
explicit cost
answer
a money payment made for resources not owned by the firm itself
question
independent of the rate of output
answer
Fixed costs are those costs that are
-zero if the firm produces no output in the short run
-unchanging through time
-independent of rate of output
-for inputs whose prices are fixed
-zero if the firm produces no output in the short run
-unchanging through time
-independent of rate of output
-for inputs whose prices are fixed
question
MP is zero
answer
The total output of a firm will be a maximum where
-MP is at a maximum
-AP is at a minimum
-MP is zero
-AP is at a maximum
-MP is at a maximum
-AP is at a minimum
-MP is zero
-AP is at a maximum
question
TFC+TVC/Q
answer
Average total cost is ________.
-TVC-MC
-TVC-TFC/Q
-TVC/Q
-TFC+TVC/Q
-TVC-MC
-TVC-TFC/Q
-TVC/Q
-TFC+TVC/Q
question
false
answer
True or False
If the minimum efficient scale in an industry were smaller than the size of the market of that industry, then we would have a natural-monopoly situation.
If the minimum efficient scale in an industry were smaller than the size of the market of that industry, then we would have a natural-monopoly situation.
question
the sum of all explicit costs and implicit costs
answer
Economic costs are equal to
-the opportunity costs of all resources owned by the firm
-actual expenses paid by the firm for all of its inputs
-the sum of all explicit costs and implicit costs
-accounting costs
-the opportunity costs of all resources owned by the firm
-actual expenses paid by the firm for all of its inputs
-the sum of all explicit costs and implicit costs
-accounting costs
question
$60,000
answer
Harvey quit his job at State University, where he earned $45,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.
The implicit costs of Harvey's firm in the first year were
$50,000
$60,000
$100,000
$150,000
The implicit costs of Harvey's firm in the first year were
$50,000
$60,000
$100,000
$150,000
question
prices for their output temporarily fall below their average variable costs of production
answer
Oil wells and seasonal resorts will often shut down temporarily because
-prices for their output temporarily fall below their average variable costs of production
-fixed costs temporarily rise, making production unprofitable
-variable costs for pumping oil and operating resorts fluctuate significantly
-government regulations require seasonal shutdowns for maintenance purpose
-prices for their output temporarily fall below their average variable costs of production
-fixed costs temporarily rise, making production unprofitable
-variable costs for pumping oil and operating resorts fluctuate significantly
-government regulations require seasonal shutdowns for maintenance purpose
question
down of the individual firm's MC curve, causing the market supply curve to shift to the right
answer
Technological advance improves productivity in a purely competitive industry. This change will result in a shift
-down of the individual firm's MC curve, causing the market supply curve to shift to the left.
-down of the individual firm's MC curve, causing the market supply curve to shift to the right.
-down of the individual firm's MC curve, causing the market supply curve to shift to the right.
-up of the individual firm's MC curve, causing the market supply curve to shift to the right
-down of the individual firm's MC curve, causing the market supply curve to shift to the left.
-down of the individual firm's MC curve, causing the market supply curve to shift to the right.
-down of the individual firm's MC curve, causing the market supply curve to shift to the right.
-up of the individual firm's MC curve, causing the market supply curve to shift to the right
question
b. will earn higher profits or experience smaller losses as a result of the change in the market.
answer
If the market demand for the product increases, in the short run a purely competitive firm
a. will not change its output quantity because there are so many firms that the individual firm will not be affected by the change.
b. will earn higher profits or experience smaller losses as a result of the change in the market.
c. will experience no change in costs as it steps up production in response to the change in the market.
d. can employ more inputs and increase the size of its plant, to respond to the change in the market.
a. will not change its output quantity because there are so many firms that the individual firm will not be affected by the change.
b. will earn higher profits or experience smaller losses as a result of the change in the market.
c. will experience no change in costs as it steps up production in response to the change in the market.
d. can employ more inputs and increase the size of its plant, to respond to the change in the market.
question
oligopoly
answer
An industry comprising a small number of firms, each of which considers the potential reactions of its rivals in making-price output decisions, is called
a. monopolistic competition
b. oligopoly
c. pure monopoly
d. pure competition
a. monopolistic competition
b. oligopoly
c. pure monopoly
d. pure competition
question
product price and average total cost
answer
on a per unit basis, economic profit can be determined as the difference between
a. marginal revenue and product price
b. product price and average total cost
c. marginal revenue and marginal cost
d. average fixed cost and product price
a. marginal revenue and product price
b. product price and average total cost
c. marginal revenue and marginal cost
d. average fixed cost and product price
question
false
answer
True or False
If a purely competitive firm is producing a level of output greater than its profit-maximizing output, then its profits must be negative
If a purely competitive firm is producing a level of output greater than its profit-maximizing output, then its profits must be negative
question
price takers
answer
Which characteristic would best be associated with pure competition?
a. few sellers
b. price takers
c. nonprice competition
d. product differentiation
a. few sellers
b. price takers
c. nonprice competition
d. product differentiation
question
summing horizontally the segments of the MC curves lying above the AVC curve for all firms
answer
The short-run supply curve for a purely competitive industry can be found by
a. multiplying the AVC curve of the representative firm by the number of firms in the industry
b. adding horizontally the AVC curves of all firms
c. summing horizontally the segments of the MC curves lying above the AVC curve for all firms
d. adding horizontally the immediate market period supply curves of each firm
a. multiplying the AVC curve of the representative firm by the number of firms in the industry
b. adding horizontally the AVC curves of all firms
c. summing horizontally the segments of the MC curves lying above the AVC curve for all firms
d. adding horizontally the immediate market period supply curves of each firm
question
Its average revenue equals its marginal revenue
answer
A purely competitive firm can be identified by the fact that
a. there are other firms in the industry producing similar products
b. It is making only normal profits in the short run
c. Its average revenue equals its marginal revenue
d. It experiences diminishing marginal returns
a. there are other firms in the industry producing similar products
b. It is making only normal profits in the short run
c. Its average revenue equals its marginal revenue
d. It experiences diminishing marginal returns
question
false
answer
True or False
In maximizing profit, a firm will always produce that output where total revenues are at a maximum
In maximizing profit, a firm will always produce that output where total revenues are at a maximum
question
total revenue is less than total variable cost
answer
In the standard model of pure competition, a profit-maximizing firm will shut down in the short run if
a. marginal cost is greater than average revenue
b. average cost is greater than average revenue
c. average fixed cost is greater than average revenue
d. total revenue is less than total variable cost
a. marginal cost is greater than average revenue
b. average cost is greater than average revenue
c. average fixed cost is greater than average revenue
d. total revenue is less than total variable cost
question
both allocative efficiency and productive efficiency are being achieved
answer
If for a firm P= minimum ATC= MC, then
a. neither allocative efficiency nor productive efficiency is being achieved
b. productive efficiency is being achieved, but allocative efficiency is not
c. both allocative efficiency and productive efficiency are being achieved
d. allocative efficiency is being achieved, but productive efficiency is not
a. neither allocative efficiency nor productive efficiency is being achieved
b. productive efficiency is being achieved, but allocative efficiency is not
c. both allocative efficiency and productive efficiency are being achieved
d. allocative efficiency is being achieved, but productive efficiency is not
question
true
answer
true or false
When some firms leave a purely competitive industry, the market supply curve will shift in such a way that the remaining firms' profits will increase
When some firms leave a purely competitive industry, the market supply curve will shift in such a way that the remaining firms' profits will increase
question
benefits to everyone in society
answer
So-called creative destruction leads to all of the following except
a. new products and low-cost production techniques
b. more efficient use of society's scare resource
c. benefits to everyone in society
d. hardship to some producers and workers
a. new products and low-cost production techniques
b. more efficient use of society's scare resource
c. benefits to everyone in society
d. hardship to some producers and workers
question
marginal cost equals the marginal benefit to society
answer
Allocative efficiency occurs when the
a. minimum of average total cost equals average revenue
b. minimum of average total cost equals marginal revenue
c. marginal cost equals the marginal benefit to society
d. marginal revenue equals marginal benefit to society
a. minimum of average total cost equals average revenue
b. minimum of average total cost equals marginal revenue
c. marginal cost equals the marginal benefit to society
d. marginal revenue equals marginal benefit to society
question
true
answer
true or false
In the long run, assuming that market demand stays the same, if firms in a competitive industry expand, then the product price will tend to fall as a result
In the long run, assuming that market demand stays the same, if firms in a competitive industry expand, then the product price will tend to fall as a result
question
a. If total market output is increased, unit costs of production increases
answer
Which of the following statements is true for a long-run supply curve that slopes upward?
a. If total market output is increased, unit costs of production increases
b. If total market output is unchanged, unit costs of production increases
c. The total cost of producing 15 units is no longer than the cost of producing 10 units
d. If total market output is decreased, total costs of production will remain unchanged
a. If total market output is increased, unit costs of production increases
b. If total market output is unchanged, unit costs of production increases
c. The total cost of producing 15 units is no longer than the cost of producing 10 units
d. If total market output is decreased, total costs of production will remain unchanged
question
decrease and individual firms' profits to decrease
answer
Assume the market for ball bearings is purely competitive. Currently, each of the firms in this market is earning positive economic profits. In the long run, as adjustments occur in the industry, we can expect the market price of ball bearings to
a. increase and individual firms' profits to decrease
b. increase and individual firms' profits to increase
c. decrease individual firms' profits to increase
d. decrease and individual firms' profits to decrease
a. increase and individual firms' profits to decrease
b. increase and individual firms' profits to increase
c. decrease individual firms' profits to increase
d. decrease and individual firms' profits to decrease
question
other firms will enter the industry in the long run
answer
If the representative firm in a purely competitive industry is in short-run equilibrium and, at its current output level, its marginal cost exceeds its average total cost, then we can conclude that
a. the firm is suffering economic losses
b. the firm is not maximizing profits in the short run
c. some firms will exit the industry in long run
d. other firms will enter the industry in the long run
a. the firm is suffering economic losses
b. the firm is not maximizing profits in the short run
c. some firms will exit the industry in long run
d. other firms will enter the industry in the long run
question
c. Balin's is operating in the short run, but not the long run.
answer
Balin's Burger Barn operates in a perfectly competitive market. Balin's is currently earning economic profits of $20,000 per year. Based on this information, we can conclude that
a. Balin's profits will discourage new firms from entering.
b. Balin's will increase its market price over the coming months.
c. Balin's is operating in the short run, but not the long run.
d. Balin's is operating in the long run.
a. Balin's profits will discourage new firms from entering.
b. Balin's will increase its market price over the coming months.
c. Balin's is operating in the short run, but not the long run.
d. Balin's is operating in the long run.
question
In both the short run and the long run
answer
The MR=MC rule applies
a. In the short run but not in the long run
b. in the long run but not in the short run
c. in both the short run and the long run
d. only to a purely competitive firm
a. In the short run but not in the long run
b. in the long run but not in the short run
c. in both the short run and the long run
d. only to a purely competitive firm
question
...
answer
An increasing-cost industry is the result of
a. higher resource prices that occur as the industry expands
b. a change in the industry's minimum efficient scale
c. X-inefficiency
d. the law of diminishing returns
a. higher resource prices that occur as the industry expands
b. a change in the industry's minimum efficient scale
c. X-inefficiency
d. the law of diminishing returns
question
will be the same as the initial price, and the output will be less
answer
Assume a purely competitive constant-cost industry is initially at long-run equilibrium. Now suppose that a decrease in demand occurs. After all the long-run adjustments have been completed, the new equilibrium price
a. and industry output will be less than the initial price and output
b. will be the same as the initial price, and the output will be less
c. will be greater than the initial, but the new output will be less
d. will be less than the initial price, but the new output will be greater
a. and industry output will be less than the initial price and output
b. will be the same as the initial price, and the output will be less
c. will be greater than the initial, but the new output will be less
d. will be less than the initial price, but the new output will be greater
question
changes in the market demand
answer
Which of the following is not a factor that automatically pushes firms in pure competition to earn only normal profits in the long run?
a. entry of new firms
b. exit of some firms
c. changes in the firms' plant size
d. changes in the market demand
a. entry of new firms
b. exit of some firms
c. changes in the firms' plant size
d. changes in the market demand
question
false
answer
True or false
Successful price discrimination requires that buyers charged the different prices be physically separated
Successful price discrimination requires that buyers charged the different prices be physically separated
question
marginal revenue is less than average revenue
answer
The non-discriminating pure monopolist must decrease price on all units of a product sold in order to sell more units. This explains why
a. there are barriers to entry in pure monopoly
b. a monopoly has a perfectly elastic demand curve
c. marginal revenue is less than average revenue
d. total revenues are greater than total costs at the profit maximizing level of output
a. there are barriers to entry in pure monopoly
b. a monopoly has a perfectly elastic demand curve
c. marginal revenue is less than average revenue
d. total revenues are greater than total costs at the profit maximizing level of output
question
that cannot be determined with the information provided
answer
Answer the question on the basis of the accompanying table, which shows the demand schedule facing a nondiscriminating monopolist.
P Qd
$10 1
7 2
5 3
3 4
1 5
The profit-maximizing monopolist will sell at a price
a. of $10
b. of $7
c. of $ 5
d. that cannot be determined with the information provided
P Qd
$10 1
7 2
5 3
3 4
1 5
The profit-maximizing monopolist will sell at a price
a. of $10
b. of $7
c. of $ 5
d. that cannot be determined with the information provided
question
$4.75
answer
Suppose that a pure monopolist can sell 20 units of output at $10 per unit and 21 units at $9.75 per unit. The marginal revenue of the 21st unit of output is
a. $9.75
b. $204.75
c. $4.75
d. $0.25
a. $9.75
b. $204.75
c. $4.75
d. $0.25
question
less output and charge a higher price
answer
When compared with the purely competitive industry with identical costs of production, a monopolist will produce
a. more output and charge the same price
b. more output and charger a higher price
c. less output and charge a higher price
d. less output and charge the same price
a. more output and charge the same price
b. more output and charger a higher price
c. less output and charge a higher price
d. less output and charge the same price
question
marginal revenue
answer
In the long run, a pure monopolist will maximize profits by producing that output at which marginal cost is equal to
a. average total cost
b. marginal revenue
c. average variable cost
d. average cost
a. average total cost
b. marginal revenue
c. average variable cost
d. average cost
question
decreasing price and increasing output
answer
Suppose that a monopolist calculates that at its present output level, marginal cost is $4.00 and marginal revenue is $5.00. The firm could increase profits by
a. decreasing price and increasing output
b. increasing price and decreasing output
c. decreasing price and leaving output
d. decreasing output and leaving prices unchanged
a. decreasing price and increasing output
b. increasing price and decreasing output
c. decreasing price and leaving output
d. decreasing output and leaving prices unchanged
question
X-inefficiency
answer
Which of the following is not a barrier to entry?
a. patents
b. X-inefficiency
c. economies of scale
d. ownership of essential resources
a. patents
b. X-inefficiency
c. economies of scale
d. ownership of essential resources
question
simultaneous consumption
answer
Marginal costs of a producer may be very small due to its product's ability to satisfy a large number of consumers at the same time. This characteristic of a product is called
a. economies of scale
b. rent-seeking
c. simultaneous consumption
d. consumer sovereignty
a. economies of scale
b. rent-seeking
c. simultaneous consumption
d. consumer sovereignty
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
