Chapter 5 econ

The short run is best defined as:

a period of time sufficiently short that at least one factor of production is fixed.

An imperfectly competitive firm is one that:

has at least some influence over the market price.

A price-taker faces a demand curve that is:

horizontal at the market price.

A rational seller will sell another unit of output:

if the cost of making another unit is less than (or = to) the revenue gained from selling another unit.

Individual supply curves generally slope ______ because ______.

upward; of increasing opportunity costs.

Law of diminishing returns

A property of the relationship between the amount of a good or service produced and the amount of a variable factor required to produce it. The law says that when some factors of production are fixed, increased production of the good eventually requires even larger increases in the variable factor.

Which of the following is NOT true of a perfectly competitive firm?

It seeks to maximize revenue.

If a perfectly competitive firm produces an output level at which price is greater than marginal cost, then the firm should:

expand output to earn greater profits or smaller losses.

An increase in the price a firm receives for its output will lead the firm to:

expand output.

In general, perfectly competitive firms maximize their profit by producing the level of output at which:

marginal cost equals price.

The primary objective of most private firms is to:

maximize profit.

A profit-maximizing perfectly competitive firm must decide:

only how much to produce, taking price as fixed.

A seller's supply curve shows the seller's:

opportunity cost of producing an additional unit of output at each quantity.

The Cost-Benefit Principle tells us that a firm should continue to expand production as long as:

price of the good is greater than its marginal cost.

Total revenue minus both explicit and implicit costs defines a firm's:

profit.

If a perfectly competitive firm produces an output level at which price is less than marginal costs, then the firm should:

reduce output to earn greater profits or smaller losses

A decrease in the price a firm receives for its output will lead the firm to:

reduce output.

If a firm's total revenue is less than its total variable costs when the firm produces the level of output at which price equals marginal cost, then the firm should:

shut down.