question
READ THE CATEGORIES ON TABLES
answer
YOU FOOL!!!
question
Monopolies and perfectly competitive firms both...
answer
Maximize profit by equating marginal revenue with cost; average revenue is equal to price
question
Total costs only include...
answer
explicit costs (price of materials, fixed costs)
question
TOTAL COSTS do NOT include...
answer
opportunity costs
question
Jessica makes photo frames. She spends $5 on the materials for each photo frame. She can create one photo frame in an hour. She earns $10 per hour at a part-time job at the local coffee shop. She can sell a photo frame for $30 each.
An accountant would calculate the total cost for one photo frame to be...
An accountant would calculate the total cost for one photo frame to be...
answer
$5
because of TOTAL COST
because of TOTAL COST
question
Thirsty Thelma owns and operates a small lemonade stand. When Thelma is producing a low quantity of lemonade she has few workers and her equipment is not being fully utilized. Because she can easily put her idle resources to use,
answer
c.
the marginal cost of one more glass of lemonade is smaller than if output were high.
the marginal cost of one more glass of lemonade is smaller than if output were high.
question
The fundamental reason that marginal cost eventually rises as output increases is because of
answer
b.
diminishing marginal product.
diminishing marginal product.
question
Land of Many Lakes (LML) sells butter to a broker in Albert Lea, Minnesota. Because the market for butter is generally considered to be competitive, LML does not
answer
b.
choose the price at which it sells its butter.
choose the price at which it sells its butter.
question
If marginal cost exceeds marginal revenue, the firm
answer
a.
may still be earning a positive accounting profit.
may still be earning a positive accounting profit.
question
Marginal cost is equal to
answer
change in total cost divided by change in output OR change in profit
question
The exit of existing firms from a competitive market will
answer
b.
decrease market supply and increase market price.
decrease market supply and increase market price.
question
Entry and exit of a perfectly competitive market will end when
answer
economic profits are zero and price equals minimum average total cost
question
Patents and copyrights
answer
encourage creative activity
question
Monopolies of drug companies
answer
encourage research, increase an overall welfare, and increase the availability of medications
question
total revenue
answer
the amount the firm receives for the sale of its outputs
question
total cost
answer
the amount the firm pays to buy inputs
question
profit
answer
a firms total revenue minus total costs
question
explicit costs
answer
input costs that require an outlay of money by the firm
question
implicit costs
answer
input costs that do not require an outlay of money by the firm
question
economic profit
answer
total revenue minus total cost, including both explicit and implicit costs
question
accounting profit
answer
total revenue minus total explicit cost
question
production function
answer
the relationship between quantity of inputs used to make a good and the quantity of output of that good
question
marginal product
answer
the increase in output that arises from an additional unit of input
question
diminishing marginal product
answer
the property whereby the marginal product of an input declines as the quantity of the input increases
question
fixed costs
answer
Costs that do not vary with the quantity of output produced
question
variable costs
answer
costs that vary with the quantity of output produced
question
average total cost
answer
total cost divided by the quantity of output
question
average fixed cost
answer
fixed cost divided by the quantity of output
question
average variable cost
answer
variable cost divided by the quantity of output
question
marginal cost
answer
the increase in total cost that arises from an extra unit of production
question
efficient scale
answer
the quantity of output that minimizes average total cost
question
economies of scale
answer
the property whereby long-run average total cost falls as the quantity of output increases
question
diseconomies of scale
answer
the property whereby long-run average total cost rises as the quantity of output increases
question
constant return to scale
answer
the property whereby long-run average total cost stays the same as the quantity of output changes
question
competitive market
answer
a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker
question
characteristics of a competitive market
answer
-Many buyers and sellers
-The goods sold by each vendor are similar
-No one individual has any influence over the price
-Firms can freely enter and exit the market
-The goods sold by each vendor are similar
-No one individual has any influence over the price
-Firms can freely enter and exit the market
question
average revenue
answer
total revenue divided by the quantity sold
question
marginal revenue
answer
the change in total revenue from an additional unit sold
question
As long as marginal revenue exceeds marginal cost...
answer
increasing the quantity produced raises profit
question
Marginal revenue equals the price of the good in...
answer
a competitive market
question
Three general rules for profit maximization
answer
1. If marginal revenue is greater than marginal cost, the firm should increase its output
2. If marginal cost is greater than marginal revenue, the firm should decrease its output
3. At the profit-maximizing level of output, marginal revenue and marginal cost are exactly equal
2. If marginal cost is greater than marginal revenue, the firm should decrease its output
3. At the profit-maximizing level of output, marginal revenue and marginal cost are exactly equal
question
A shutdown happens when...
answer
a firm makes a short-run decision not to produce anything during a specific period of time because of current market conditions
question
Exit refers to...
answer
a long-run decision to leave the market
question
The short-run and long-run decisions differ because...
answer
most firms cannot avoid their fixed costs in the short-run but can long-run
question
sunk cost
answer
a cost that has already been committed and cannot be recovered
question
Monopoly
answer
a firm that is the sole seller of a product without close substitutes
question
natural monopoly
answer
a type of monopoly that arises because a single firm can supply a good or service to an entire market at a lower cost than could two or more firms
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
