Psych 3240 exam 2 - Assignment Essays

question

COMPETITIVE MARKETS

answer

-markets that have many buyers and sellers so that no single buyer or seller can influence the price.
-consist of (perfectly competitive-price takers, monopolistic-price searchers, oligopoly-price searcher)

question

monopolistic competition

answer

...

question

Average Total Cost (ATC)

answer

TC/Q or AFC + AVC

question

average fixed cost (ATC)

answer

ATC-AVC

question

area

answer

q* (P value line-ATC)

question

profit

answer

TR-TC (total revenue- total cost)

question

increase in demand in the market leads to

answer

increase demand mean increase price then encourages more production (increase in output and increase in profit)

question

the second p line is the horizontal line that goes through ATC with the new demand (if demand is the change in the market)

answer

the first p line is at the minimum of the ATC line

question

are small relative to the total market

answer

firms that are price takers (perfectly competitive firms)

question

a corn farmer in iowa

answer

which pf the following is a price taker?

question

reduce output

answer

if marginal revenue is less than marginal cost then, the price taker should

question

additional firms will be attracted into the market until economic profit is zero

answer

When a firm in a price taker market is temporarily able to charge a price that exceeds its production costs:

question

easy entry into the market

answer

Which of the following is necessary to ensure competition in a market?

question

could increase your profit by expanding output

answer

If you were the owner of a price taker firm operating at an output level where the marginal cost of producing another unit is $55 and the market price is $72, then you

question

if a perfectly competitive firm increased its price, consumers would buy from other suppliers

answer

Which of the following best explains why a firm in a perfectly competitive market must sell at the price determined in the market?

question

price searchers have to cut their prices to sell additional output, but price takers do not

answer

Which of the following is a primary difference between price searchers and price takers?

question

a barrier to entry

answer

A law that requires businesses to obtain a government issued license in order to enter a market is an example of:

question

equal to price

answer

Marginal revenue of a perfectly competitive firm is:

question

less than market price

answer

For a price searcher, marginal revenue is

question

as long as marginal revenue exceeds the marginal cost of the unit

answer

A profit maximizing firm will continue to expand output:

question

operating revenue is less than total variable cost

answer

A firm should shutdown in the short run if:

question

is doing as well as typical firms in other markets

answer

If a firm in a price taker market is earning zero economic profit, it:

question

going out of business (permenantly)

answer

The only way a firm can avoid fixed costs is by:

question

over time, new firms will enter the industry and old firms will expand their operations in response to the price increase

answer

When the demand for a product increases, the increase in quantity supplied will generally be greater in the long run than in the short run because:

question

1.) existing firms exiting the wheat industry in the long run
2.) a decrease in the price of wheat in the short run
3.) existing producers decreasing output in the short run
all of these

answer

A long term decrease in demand in the wheat industry will result in:

question

an increasing cost industry

answer

If expansion of output in an industry leads to rising input prices, the industry must be:

question

lower profits for firms that were already in the market

answer

When firms have an incentive to enter a competitive price taker market, their entry will:

question

price is less than average variable cost

answer

In the short run, a profit maximizing firm in a price-taker market will shut down production if

question

a horizontal line for a constant cost industry

answer

The long run supply curve is

question

the marginal cost curve above its intersection with the average variable cost curve because below this price, firms will shut down in the short run

answer

Which portion of the firm's marginal cost curve determines a firm's short-run supply curve?

question

upward sloping

answer

If an input necessary for production is in limited supply so that an expansion of the industry raises costs for all existing firms in the market, the long-run market supply curve for the good would be:

question

will be greater in the long run than the short run

answer

All else constant, the price elasticity of supply:

question

relatively elastic

answer

If output expands a lot in response to a given increase in price, supply is:

1 of 33

question

COMPETITIVE MARKETS

answer

question

monopolistic competition

answer

...

question

Average Total Cost (ATC)

answer

TC/Q or AFC + AVC

question

average fixed cost (ATC)

answer

ATC-AVC

question

area

answer

q* (P value line-ATC)

question

profit

answer

TR-TC (total revenue- total cost)

question

increase in demand in the market leads to

answer

increase demand mean increase price then encourages more production (increase in output and increase in profit)

question

the second p line is the horizontal line that goes through ATC with the new demand (if demand is the change in the market)

answer

the first p line is at the minimum of the ATC line

question

are small relative to the total market

answer

firms that are price takers (perfectly competitive firms)

question

a corn farmer in iowa

answer

which pf the following is a price taker?

question

reduce output

answer

if marginal revenue is less than marginal cost then, the price taker should

question

additional firms will be attracted into the market until economic profit is zero

answer

When a firm in a price taker market is temporarily able to charge a price that exceeds its production costs:

question

easy entry into the market

answer

Which of the following is necessary to ensure competition in a market?

question

could increase your profit by expanding output

answer

If you were the owner of a price taker firm operating at an output level where the marginal cost of producing another unit is $55 and the market price is $72, then you

question

if a perfectly competitive firm increased its price, consumers would buy from other suppliers

answer

Which of the following best explains why a firm in a perfectly competitive market must sell at the price determined in the market?

question

price searchers have to cut their prices to sell additional output, but price takers do not

answer

Which of the following is a primary difference between price searchers and price takers?

question

a barrier to entry

answer

A law that requires businesses to obtain a government issued license in order to enter a market is an example of:

question

equal to price

answer

Marginal revenue of a perfectly competitive firm is:

question

less than market price

answer

For a price searcher, marginal revenue is

question

as long as marginal revenue exceeds the marginal cost of the unit

answer

A profit maximizing firm will continue to expand output:

question

operating revenue is less than total variable cost

answer

A firm should shutdown in the short run if:

question

is doing as well as typical firms in other markets

answer

If a firm in a price taker market is earning zero economic profit, it:

question

going out of business (permenantly)

answer

The only way a firm can avoid fixed costs is by:

question

over time, new firms will enter the industry and old firms will expand their operations in response to the price increase

answer

When the demand for a product increases, the increase in quantity supplied will generally be greater in the long run than in the short run because:

question

1.) existing firms exiting the wheat industry in the long run
2.) a decrease in the price of wheat in the short run
3.) existing producers decreasing output in the short run
all of these

answer

A long term decrease in demand in the wheat industry will result in:

question

an increasing cost industry

answer

If expansion of output in an industry leads to rising input prices, the industry must be:

question

lower profits for firms that were already in the market

answer

When firms have an incentive to enter a competitive price taker market, their entry will:

question

price is less than average variable cost

answer

In the short run, a profit maximizing firm in a price-taker market will shut down production if

question

a horizontal line for a constant cost industry

answer

The long run supply curve is

question

the marginal cost curve above its intersection with the average variable cost curve because below this price, firms will shut down in the short run

answer

Which portion of the firm's marginal cost curve determines a firm's short-run supply curve?

question

upward sloping

answer

question

will be greater in the long run than the short run

answer

All else constant, the price elasticity of supply:

question

relatively elastic

answer

If output expands a lot in response to a given increase in price, supply is:

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