WGU Microeconomics - Assignment Essays

question

Which economic question depends on the incomes that people earn and the prices they pay for goods and services?

answer

FOR WHOM

question

Computers and insurance coverage produced in the USA and sold to people in other nations are categorized as:

answer

US exports of goods and services

question

Economists classify energy and water as part of which factor of production?

answer

LAND

question

A flow model shows the interrelationship between the_________ market and the ___________ markets.

answer

GOODS; FACTOR

question

Scarcity results form the fact that:

answer

a people's wants exceed the resources available to satisfy them

question

All economics questions and problems arise from:

answer

a society's wants exceeding what its scarce resources can produce

question

Which of the following is not considered one of the factors of production?

answer

TECHNOLOGY

question

If Wendy can produce more of all goods than Tommy in an hour, then:

answer

Wendy has an absolute advantage

question

Which of the following are key ideas in the economic way of thinking?

answer

A- People act rationally when making choices.
and
B- Choices involve trade-offs

question

A change in the demand for apples could result form any of the following, EXCEPT:

answer

a change in the price of an apple

question

If the demand for used cars decreases after the price of a new car falls, used cars and new cars are:

answer

SUBSTITUTE GOODS

question

Other things remaining the same, the quantity of a good or service demanded will increase if the price of the good or service:

answer

FALLS

question

Which of the following increases the supply of a product?

answer

Lower prices for the resources used to produce the product

question

Which of the following increases the supply of gasoline?

answer

A decrease in the price of a resource used to produce gas; such as crude oil

question

Changes in which of the following factors do NOT shift the demand curve?

answer

The PRICE of a good

question

Assume a market is in equilibrium. There is an increase in supply, but no change in demand. As a result, the equilibrium price________ and the equilibrium quantity __________.

answer

FALLS; INCREASES

question

The phrase "a change in demand" most directly implies a:

answer

shift of the demand curve

question

Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result, the equilibrium price _________, and the equilibrium quantity ______________.

answer

RISES; INCREASES

question

Which of the following two statements would increase the equilibrium price of bananas?

answer

- A hurricane wiped out the banana crop in South America.
- Medical research that demonstrates the cancer fighting ability of the banana.

question

Price is $10 - QTY Demanded 100
Price is $9 - QTY Demanded 125
This data gives two points on the demand curve for pizza. Using the midpoint method, when the price of a pizza falls from $10 to $9, what is the percentage change in price?

answer

10.5%

question

Price is $10 - QTY Demanded 100
Price is $9 - QTY Demanded 125
Using the Midpoint Method: What is the percentage change in the quantity demanded?

answer

22.22

question

Price is $10 - QTY Demanded 100
Price is $9 - QTY Demanded 125
What is the price elasticity of demand?

answer

2.1

question

Q1 = 10
Q2 = 14
P1 = 8
P2 = 7
Using the Midpoint Method, the price elasticity of demand when the price falls from $8 to $7 is equal to:

answer

2.5

question

If a firm supplies 200 units at a price of $50 and 100 units at a price of $40, using the midpoint method, what is the price elasticity of supply?

answer

question

Consumer surplus is equal to:

answer

A marginal benefit minus price summed over the quantity consumed

question

In the summer of 2008, the price of gasoline increased greatly. If the demand curve for gas did not shift, which of the following occurred?

answer

Consumer surplus decreased

question

Mary is willing to pay $50 for a tree. John is willing to pay $45 and Jeff is willing to pay $40. The price of a tree is $40.00. The total consumer surplus for Mary, John, and Jeff taken together is:

answer

question

(Price goes from .00 up to $2.50. Qty goes from 0 to 25. Demand curve is downward sloping from $2.50 to qty of 25. Market price is $1.00)
The figure above shows Diane's demand curve for soda. The price of a soda is $1.00. Diane's consumer surplus from her 10th soda is:

answer

$0.50

question

Producer surplus is the ____________ summed over the quantity produced.

answer

Price of the good minus the marginal cost of producing it

question

Producer surplus:

answer

increases if market price rises and the supply curve does not shift

question

Which of the following influence the price elasticity of demand? (choose 2)

answer

1- availability of substitutes
2- proportion of income spent on good

question

The PPF (production possibilities frontier) illustrates the:

answer

maximum combinations of goods and services that can be produced

question

The PPF is the:

answer

boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology

question

If a society moves from a period of time with significant unemployment to a time with full employment, its PPF will:

answer

NOT shift because the society moves from a point inside the frontier to a point on the frontier

question

When production efficiency does not occur:

answer

- an economy is producing at a point within the PPF
- there are unemployed resources
- allocative efficiency cannot occur

question

If there is unemployment in an economy, then the:

answer

economy is producing at point inside the PPF

question

A country produces only apples and bananas. Moving from point A to point B along its PPF, 5 apples are forgone and 4 bananas are gained. What is the opportunity cost of a banana?

answer

5/4 of an apple

question

When drawing a PPF, which of the following is held constant?

answer

the available factors of production and the state of technology

question

When an economy is producing at a point on its PPF: (choose 2)

answer

- Producing a different output combination will require a trade-off
- Technology is being used efficiently

question

The opportunity cost of producing one more unit of a good is calculated by dividing the:

answer

decrease in the quantity of the other good by the increase in the quantity of the good whose opportunity cost we're calculating

question

If a price ceiling is set above the equilibrium price, then:

answer

there will be neither a shortage nor a surplus of the good

question

A price ceiling in the market for gasoline that is below the equilibrium price will lead to:

answer

The

question

Rent controls:

answer

- Create a deadweight loss
- Benefit people who live in rent controlled apartments

question

A price floor is a price:

answer

below which a seller cannot legally sell

question

When a price support is set below the equilibrium price, producers ____________ the quantity supplied and consumers ______________ the quantity demanded.

answer

DO NOT CHANGE and
DO NOT CHANGE

question

An efficient price support __________ producers and _________ a deadweight loss.

answer

BENEFITS and CREATES

question

Identify the cases where the market output is efficient:

answer

- The market produces the quantity where supply and demand are equal
- The marginal cost to producers is equal to the marginal benefit of the good to consumers.

question

To determine the efficient quantity of a public good to supply:

answer

Marginal benefits and marginal cost are equated, the same is done to determine efficient quantity of a private good

question

Suppose the marginal cost of the 4th unit of a public good is $20. If Mark and Judy are the only members of a society, and they are willing to pay $10 and $11, respectively, for the 4th unit of the good, then the efficient quantity is:

answer

4 or more units

question

If tuition at a college is $30,000 and the external benefit of graduating form this college is $10,000, then:

answer

- in the absence of any government intervention, the number of students graduating is less than the efficient number
- the government could increase the number of graduates by giving the college a $10,000 subsidy per student
- The government could increase the number of graduates by giving the students $10,000 vouchers

question

The use of vouchers for education:

answer

increases the demand for education and increases the equilibrium quantity

question

A marginal external cost of a product is equal to:

answer

the cost someone other than the producer incurs when another unit is produced

question

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service:

answer

is the marginal private cost

question

An example of a common resource is:

answer

a tuna in the ocean

question

Fish in the ocean are an example of _________________ because they are _____________________________________.

answer

common resource;
rival and non-excludable

question

Which of the following characteristics are used by economists to describe a public good: (choose 2)

answer

- It's use by one person does not decrease the quantity available for someone else
- it is not possible to prevent someone from enjoying its benefits

question

Externalities:

answer

can be benefits or costs

question

For a product with an external cost:

answer

the supply curve is the same as the marginal private cost curve

question

For a firm, its labor costs are:

answer

a private cost

question

A marginal external cost of a product is equal to:

answer

the cost someone other than the producer incurs when another unit is produced

question

Which of the following equations is correct?

answer

MSC = MC + Marginal External Cost

question

If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08, what is the marginal external cost?

answer

$0.02

question

When a person receives the flu vaccination, the ____________________ is the additional benefit the person receives form getting the shot.

answer

marginal private benefit

question

If the marginal private benefit of attending college for Shelley is $40,000 and the marginal external benefit is $15,000, she will attend if the cost of attendance is no more than:

answer

$40,000

question

If a government action is designed to achieve efficiency, then the action must have the market produce the amount of output so that the:

answer

marginal social society equals the marginal social benefit

question

If all education in the US were provided by private, tuition-charging schools:

answer

too little education would be consumed

question

A good or service with a positive externality is one which:

answer

- the marginal social benefit exceeds the marginal private benefit
- there will be underproduction of the good

question

Samantha has a budget of $40 and buys beef jerky and fried pork rinds. Her budget does not change and the price of beef jerky and fried pork rinds increases. As a result:

answer

- Samantha's consumption possibilities have decreased
and
- Samantha's budget line shifts inward

question

Nadir and Nina consume the same goods. If Nadir has more income than Nina, then Nina's budget line will:

answer

lie to the left of Nadir's budget line

question

The fact that diamonds have a much higher price than water:

answer

DOES NOT violate the rules of utility maximization because water's marginal utility is low

question

The solution to the paradox of value is found by looking at which of the following?

answer

The difference between marginal utility and total utility

question

Billy has a $20 budget to spend on yogurt and cereal. Yogurt cost $2 each and cereal costs $4 each. Suppose that the quantity of yogurt is on the vertical axis and the quantity of cereal is on the horizontal axis. The budget lines vertical intercept equals:

answer

10 yogurts

question

To resolve the paradox of value, you must:

answer

distinguish between marginal and total utility

question

One reason why the price of diamonds is so high is because:

answer

the marginal utility of diamonds is high

question

Why does the paradox of value between diamonds and water arise?

answer

Because water has a low price and low marginal utility, while diamonds have a high price and a high marginal utility

question

Related to the paradox of value, which statement is correct?

answer

The marginal utility of water is small but the total utility is enormous.

question

The paradox of value with respect to water and diamonds can be explained using consumer surplus because:

answer

water is cheap but provides a large consumer surplus, while diamonds are expensive with small consumer surplus

question

The paradox of value refers to the:

answer

fact that water is vital but cheap while diamonds are relatively useless but expensive

question

_______________ in consumer surplus occurs when the price of a good __________________________________.

answer

An increase;
decreases and consumers can buy more of the good at a lower price.

question

A budget line:

answer

- shifts outward with no change in its slope if the budget increases and prices don't change
- and has a slope equal to the opportunity cost

question

The long-run average cost curve:

answer

shows the lowest average cost facing a firm as is increases output changing both its plant and labor force

question

The long-run average cost curve is U-shaped because of which of the following:

answer

economies and diseconomies of scale

question

Which of the following is an explicit cost of production?

answer

1- wages paid to workers
2- the electric bill
3- purchase of raw material

question

Which of the following are correct statements about implicit and explicit costs?

answer

- Normal profit is on implicit cost
- Wages are an explicit cost

question

A normal profit is defined as:

answer

the return to entrepreneurship

question

Jen owns a pig farm near Salina, Kansas. Last year she earned $39,000 in total revenue incurring $38,000 in explicit costs. She could have earned $27,000 as a teacher in Salina. These are all her revenue and costs. Therefore Jen earned an:

answer

accounting profit of $1,000 but incurred and economic loss of $26,000

question

Suppose a firm's total revenue is $1,000,000. The firm has incurred explicit costs of $750,000. There is also $50,000 of forgone wages by the owner, $10,000of forgone interest by the owner, $3,000 worth of economic depreciation, and $20,000 worth of normal profit. What is the firm's economic profit?

answer

$167,000

question

Dr. Khan starts his own dental practice after quitting his $150,000 job at the Mall Dental Clinic. His revenues for the first year are $500,000. He paid $90,000 in rent for the dental office, $60,000 for his manger's salary, $24,000 for the dental hygienist, $150,000 for insurance and $6,000 for miscellaneous costs. The normal profit from running his business is $20,000.

answer

Explicit Costs = $330,000
Implicit Costs = $170,000
Economic profit is = zero

question

Economies of scale are a result of:

answer

specialization of labor
and
specialization of capital

question

For a syrup producer in central Vermont, profit is maximized at the level of output for which:

answer

revenue exceeds total cost by the largest amount

question

Marginal revenue is:

answer

the change in total revenue from a one unit increase in the quantity sold

question

A firm maximizes its profit by producing the amount of output such that:

answer

a marginal revenue equals marginal cost

question

The long-run average cost curve is U-shaped because of which of the following?

answer

economies and diseconomies of scale

question

A perfectly competitive firm maximizes its profits by producing at the point where:

answer

marginal revenue is equal to marginal cost

question

If it does not shut down, a perfectly competitive firm produces where marginal cost is equal to the marginal revenue;

answer

always to maximize its profit

question

Which of the following statements will NOT be true for the perfectly competitive firm in the long-run:

answer

- The firm's average fixed costs are declining
- The firm's marginal costs exceed their average costs and the profit maximizing level of output

question

For a single-price monopoly, price is:

answer

greater than marginal revenue

question

Which of the following must a firm be able to do to successfully price discriminate?

answer

- Divide buyers into different groups according to their willingness to pay
- Prevent resale of the good or service
- Identify into which group (high willingness to pay or low willingness to pay) a buyer falls

question

To maximize its profit, a perfectly competitive firm produces so that ____________, and a single-price monopoly produces so that ______________.

answer

MR = MC
and
MR = MC

question

In contrast to competitive firms, single-price monopolies:

answer

can make an economic profit indefinitely

question

Once a monopoly has determined how much it produces, it will charge a price that:

answer

is determined by its demand curve

question

We define a monopoly as a market with:

answer

one supplier with barriers to entry

question

Which of the following are characteristics of monopoly?

answer

firm produces a unique product and there are barriers to entry in the market

question

Which of the following describes a barrier to entry?

answer

anything that protects a firm from the arrival of new competitors

question

A price-discriminating monopoly is a monopoly that:

answer

sells different units of a good or service at different prices

question

Which of the following is an example of price discrimination?

answer

Albert pays 25% less on RX drugs because he's a senior citizen

question

Monopolistic competition is a market structure in which:

answer

a large number of firms compete

question

Firms in monopolistic competition determine the profit maximizing level of output by producing:

answer

where marginal revenue equals marginal cost
MR = MC

question

Advertising is a ____________ cost that is incurred by _________________________.

answer

Fixed;
monopolistically competitive firms

question

How do advertising and other selling costs affect a firm?

answer

They shift the average total cost curve upward

question

The players in a game theory situation DO NOT act in their joint interest because of which of the following?

answer

It is not in each player's self-interest to cooperate

question

What's the conclusion in the prisoner's dilemma?

answer

Two prisoners acting in their own best interest harm their joint interest

question

Which statements are true of monopolistic competition?

answer

- Firms receive zero economic profits in the long-run
- Market prices are higher and output is lower than under perfect competition

question

In monopolistic competition, each firm supplies a small part of the market. This occurs because:

answer

there are a large number of firms

question

If a monopolistic competitive seller's marginal cost is $3.56, the firm will decrease its output if:

answer

a marginal revenue is less than $3.56

question

In which of the following ways do advertising and other selling costs affect a firm's cost curves:

answer

1- Advertising expenditures increase total fixed costs
2- Selling costs increase total fixed costs
3- Advertising and other selling costs per units of output decrease as output increases

question

A firm faces a small number of competitors. The firm is competing in a:

answer

oligopoly

question

If an industry has an HHI of 2,500 the market structure is that of:

answer

oligopoly

question

The fact that firms in oligopoly are interdependent means that:

answer

one firm's profits are affected by other firm's actions

1 of 119

question

Which economic question depends on the incomes that people earn and the prices they pay for goods and services?

answer

FOR WHOM

question

Computers and insurance coverage produced in the USA and sold to people in other nations are categorized as:

answer

US exports of goods and services

question

Economists classify energy and water as part of which factor of production?

answer

LAND

question

A flow model shows the interrelationship between the_________ market and the ___________ markets.

answer

GOODS; FACTOR

question

Scarcity results form the fact that:

answer

a people's wants exceed the resources available to satisfy them

question

All economics questions and problems arise from:

answer

a society's wants exceeding what its scarce resources can produce

question

Which of the following is not considered one of the factors of production?

answer

TECHNOLOGY

question

If Wendy can produce more of all goods than Tommy in an hour, then:

answer

Wendy has an absolute advantage

question

Which of the following are key ideas in the economic way of thinking?

answer

A- People act rationally when making choices.
and
B- Choices involve trade-offs

question

A change in the demand for apples could result form any of the following, EXCEPT:

answer

a change in the price of an apple

question

If the demand for used cars decreases after the price of a new car falls, used cars and new cars are:

answer

SUBSTITUTE GOODS

question

Other things remaining the same, the quantity of a good or service demanded will increase if the price of the good or service:

answer

FALLS

question

Which of the following increases the supply of a product?

answer

Lower prices for the resources used to produce the product

question

Which of the following increases the supply of gasoline?

answer

A decrease in the price of a resource used to produce gas; such as crude oil

question

Changes in which of the following factors do NOT shift the demand curve?

answer

The PRICE of a good

question

Assume a market is in equilibrium. There is an increase in supply, but no change in demand. As a result, the equilibrium price________ and the equilibrium quantity __________.

answer

FALLS; INCREASES

question

The phrase "a change in demand" most directly implies a:

answer

shift of the demand curve

question

Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result, the equilibrium price _________, and the equilibrium quantity ______________.

answer

RISES; INCREASES

question

Which of the following two statements would increase the equilibrium price of bananas?

answer

- A hurricane wiped out the banana crop in South America.
- Medical research that demonstrates the cancer fighting ability of the banana.

question

answer

10.5%

question

Price is $10 - QTY Demanded 100
Price is $9 - QTY Demanded 125
Using the Midpoint Method: What is the percentage change in the quantity demanded?

answer

22.22

question

Price is $10 - QTY Demanded 100
Price is $9 - QTY Demanded 125
What is the price elasticity of demand?

answer

2.1

question

Q1 = 10
Q2 = 14
P1 = 8
P2 = 7
Using the Midpoint Method, the price elasticity of demand when the price falls from $8 to $7 is equal to:

answer

2.5

question

If a firm supplies 200 units at a price of $50 and 100 units at a price of $40, using the midpoint method, what is the price elasticity of supply?

answer

question

Consumer surplus is equal to:

answer

A marginal benefit minus price summed over the quantity consumed

question

In the summer of 2008, the price of gasoline increased greatly. If the demand curve for gas did not shift, which of the following occurred?

answer

Consumer surplus decreased

question

Mary is willing to pay $50 for a tree. John is willing to pay $45 and Jeff is willing to pay $40. The price of a tree is $40.00. The total consumer surplus for Mary, John, and Jeff taken together is:

answer

question

answer

$0.50

question

Producer surplus is the ____________ summed over the quantity produced.

answer

Price of the good minus the marginal cost of producing it

question

Producer surplus:

answer

increases if market price rises and the supply curve does not shift

question

Which of the following influence the price elasticity of demand? (choose 2)

answer

1- availability of substitutes
2- proportion of income spent on good

question

The PPF (production possibilities frontier) illustrates the:

answer

maximum combinations of goods and services that can be produced

question

The PPF is the:

answer

boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology

question

If a society moves from a period of time with significant unemployment to a time with full employment, its PPF will:

answer

NOT shift because the society moves from a point inside the frontier to a point on the frontier

question

When production efficiency does not occur:

answer

- an economy is producing at a point within the PPF
- there are unemployed resources
- allocative efficiency cannot occur

question

If there is unemployment in an economy, then the:

answer

economy is producing at point inside the PPF

question

A country produces only apples and bananas. Moving from point A to point B along its PPF, 5 apples are forgone and 4 bananas are gained. What is the opportunity cost of a banana?

answer

5/4 of an apple

question

When drawing a PPF, which of the following is held constant?

answer

the available factors of production and the state of technology

question

When an economy is producing at a point on its PPF: (choose 2)

answer

- Producing a different output combination will require a trade-off
- Technology is being used efficiently

question

The opportunity cost of producing one more unit of a good is calculated by dividing the:

answer

decrease in the quantity of the other good by the increase in the quantity of the good whose opportunity cost we're calculating

question

If a price ceiling is set above the equilibrium price, then:

answer

there will be neither a shortage nor a surplus of the good

question

A price ceiling in the market for gasoline that is below the equilibrium price will lead to:

answer

The

question

Rent controls:

answer

- Create a deadweight loss
- Benefit people who live in rent controlled apartments

question

A price floor is a price:

answer

below which a seller cannot legally sell

question

When a price support is set below the equilibrium price, producers ____________ the quantity supplied and consumers ______________ the quantity demanded.

answer

DO NOT CHANGE and
DO NOT CHANGE

question

An efficient price support __________ producers and _________ a deadweight loss.

answer

BENEFITS and CREATES

question

Identify the cases where the market output is efficient:

answer

- The market produces the quantity where supply and demand are equal
- The marginal cost to producers is equal to the marginal benefit of the good to consumers.

question

To determine the efficient quantity of a public good to supply:

answer

Marginal benefits and marginal cost are equated, the same is done to determine efficient quantity of a private good

question

answer

4 or more units

question

If tuition at a college is $30,000 and the external benefit of graduating form this college is $10,000, then:

answer

question

The use of vouchers for education:

answer

increases the demand for education and increases the equilibrium quantity

question

A marginal external cost of a product is equal to:

answer

the cost someone other than the producer incurs when another unit is produced

question

The cost of producing an additional unit of a good or service that is borne by the producer of that good or service:

answer

is the marginal private cost

question

An example of a common resource is:

answer

a tuna in the ocean

question

Fish in the ocean are an example of _________________ because they are _____________________________________.

answer

common resource;
rival and non-excludable

question

Which of the following characteristics are used by economists to describe a public good: (choose 2)

answer

- It's use by one person does not decrease the quantity available for someone else
- it is not possible to prevent someone from enjoying its benefits

question

Externalities:

answer

can be benefits or costs

question

For a product with an external cost:

answer

the supply curve is the same as the marginal private cost curve

question

For a firm, its labor costs are:

answer

a private cost

question

A marginal external cost of a product is equal to:

answer

the cost someone other than the producer incurs when another unit is produced

question

Which of the following equations is correct?

answer

MSC = MC + Marginal External Cost

question

If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost is $0.08, what is the marginal external cost?

answer

$0.02

question

When a person receives the flu vaccination, the ____________________ is the additional benefit the person receives form getting the shot.

answer

marginal private benefit

question

If the marginal private benefit of attending college for Shelley is $40,000 and the marginal external benefit is $15,000, she will attend if the cost of attendance is no more than:

answer

$40,000

question

If a government action is designed to achieve efficiency, then the action must have the market produce the amount of output so that the:

answer

marginal social society equals the marginal social benefit

question

If all education in the US were provided by private, tuition-charging schools:

answer

too little education would be consumed

question

A good or service with a positive externality is one which:

answer

- the marginal social benefit exceeds the marginal private benefit
- there will be underproduction of the good

question

Samantha has a budget of $40 and buys beef jerky and fried pork rinds. Her budget does not change and the price of beef jerky and fried pork rinds increases. As a result:

answer

- Samantha's consumption possibilities have decreased
and
- Samantha's budget line shifts inward

question

Nadir and Nina consume the same goods. If Nadir has more income than Nina, then Nina's budget line will:

answer

lie to the left of Nadir's budget line

question

The fact that diamonds have a much higher price than water:

answer

DOES NOT violate the rules of utility maximization because water's marginal utility is low

question

The solution to the paradox of value is found by looking at which of the following?

answer

The difference between marginal utility and total utility

question

answer

10 yogurts

question

To resolve the paradox of value, you must:

answer

distinguish between marginal and total utility

question

One reason why the price of diamonds is so high is because:

answer

the marginal utility of diamonds is high

question

Why does the paradox of value between diamonds and water arise?

answer

Because water has a low price and low marginal utility, while diamonds have a high price and a high marginal utility

question

Related to the paradox of value, which statement is correct?

answer

The marginal utility of water is small but the total utility is enormous.

question

The paradox of value with respect to water and diamonds can be explained using consumer surplus because:

answer

water is cheap but provides a large consumer surplus, while diamonds are expensive with small consumer surplus

question

The paradox of value refers to the:

answer

fact that water is vital but cheap while diamonds are relatively useless but expensive

question

_______________ in consumer surplus occurs when the price of a good __________________________________.

answer

An increase;
decreases and consumers can buy more of the good at a lower price.

question

A budget line:

answer

- shifts outward with no change in its slope if the budget increases and prices don't change
- and has a slope equal to the opportunity cost

question

The long-run average cost curve:

answer

shows the lowest average cost facing a firm as is increases output changing both its plant and labor force

question

The long-run average cost curve is U-shaped because of which of the following:

answer

economies and diseconomies of scale

question

Which of the following is an explicit cost of production?

answer

1- wages paid to workers
2- the electric bill
3- purchase of raw material

question

Which of the following are correct statements about implicit and explicit costs?

answer

- Normal profit is on implicit cost
- Wages are an explicit cost

question

A normal profit is defined as:

answer

the return to entrepreneurship

question

answer

accounting profit of $1,000 but incurred and economic loss of $26,000

question

answer

$167,000

question

answer

Explicit Costs = $330,000
Implicit Costs = $170,000
Economic profit is = zero

question

Economies of scale are a result of:

answer

specialization of labor
and
specialization of capital

question

For a syrup producer in central Vermont, profit is maximized at the level of output for which:

answer

revenue exceeds total cost by the largest amount

question

Marginal revenue is:

answer

the change in total revenue from a one unit increase in the quantity sold

question

A firm maximizes its profit by producing the amount of output such that:

answer

a marginal revenue equals marginal cost

question

The long-run average cost curve is U-shaped because of which of the following?

answer

economies and diseconomies of scale

question

A perfectly competitive firm maximizes its profits by producing at the point where:

answer

marginal revenue is equal to marginal cost

question

If it does not shut down, a perfectly competitive firm produces where marginal cost is equal to the marginal revenue;

answer

always to maximize its profit

question

Which of the following statements will NOT be true for the perfectly competitive firm in the long-run:

answer

- The firm's average fixed costs are declining
- The firm's marginal costs exceed their average costs and the profit maximizing level of output

question

For a single-price monopoly, price is:

answer

greater than marginal revenue

question

Which of the following must a firm be able to do to successfully price discriminate?

answer

question

To maximize its profit, a perfectly competitive firm produces so that ____________, and a single-price monopoly produces so that ______________.

answer

MR = MC
and
MR = MC

question

In contrast to competitive firms, single-price monopolies:

answer

can make an economic profit indefinitely

question

Once a monopoly has determined how much it produces, it will charge a price that:

answer

is determined by its demand curve

question

We define a monopoly as a market with:

answer

one supplier with barriers to entry

question

Which of the following are characteristics of monopoly?

answer

firm produces a unique product and there are barriers to entry in the market

question

Which of the following describes a barrier to entry?

answer

anything that protects a firm from the arrival of new competitors

question

A price-discriminating monopoly is a monopoly that:

answer

sells different units of a good or service at different prices

question

Which of the following is an example of price discrimination?

answer

Albert pays 25% less on RX drugs because he's a senior citizen

question

Monopolistic competition is a market structure in which:

answer

a large number of firms compete

question

Firms in monopolistic competition determine the profit maximizing level of output by producing:

answer

where marginal revenue equals marginal cost
MR = MC

question

Advertising is a ____________ cost that is incurred by _________________________.

answer

Fixed;
monopolistically competitive firms

question

How do advertising and other selling costs affect a firm?

answer

They shift the average total cost curve upward

question

The players in a game theory situation DO NOT act in their joint interest because of which of the following?

answer

It is not in each player's self-interest to cooperate

question

What's the conclusion in the prisoner's dilemma?

answer

Two prisoners acting in their own best interest harm their joint interest

question

Which statements are true of monopolistic competition?

answer

- Firms receive zero economic profits in the long-run
- Market prices are higher and output is lower than under perfect competition

question

In monopolistic competition, each firm supplies a small part of the market. This occurs because:

answer

there are a large number of firms

question

If a monopolistic competitive seller's marginal cost is $3.56, the firm will decrease its output if:

answer

a marginal revenue is less than $3.56

question

In which of the following ways do advertising and other selling costs affect a firm's cost curves:

answer

1- Advertising expenditures increase total fixed costs
2- Selling costs increase total fixed costs
3- Advertising and other selling costs per units of output decrease as output increases

question

A firm faces a small number of competitors. The firm is competing in a:

answer

oligopoly

question

If an industry has an HHI of 2,500 the market structure is that of:

answer

oligopoly

question

The fact that firms in oligopoly are interdependent means that:

answer

one firm's profits are affected by other firm's actions

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