ECON

Assume that a firm's total revenue is less than its total cost for the level of output it is producing. In the short run, this firm should:

e. There is not enough information to answer the question

In the short run, if a firm shuts down, its total revenue is

a. $0

In which of the following cases would we expect economic profits to be greatest?

a. an unregulated monopolist who is able to price discriminate

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if it

a. can prevent children from reselling the low priced tickets to the adults

A firm sells grapefruit in a perfectly competitive market at a price of $1.50 per pound. The firm's marginal revenue:

a. equals $1.50

A profit maximizing perfectly competitive firm would never operate at an output level where

a. it would not cover all of its total variable costs

As long as MR > MC, the marginal profit is ______ and total profit will be ______

a. positive, increasing

For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $10 and a marginal cost of $7. It follows the

a. production of the 100th unit of output increases the firm's profit by $3

Say that a monopolist is currently operating on the inelastic region of its demand curve. To maximize its profits, it should:

a. raise its prices

If a profit-maximizing firm finds that total revenue exceeds total variable cost, total revenue is less than total cost, and marginal cost is greater than marginal revenue, it should:

a. reduce output, but continue producing in the short run

If the market price rises, the TR curve for a perfectly competitive firm will

a. rotate upward and become steeper

Darlene runs a fruit and vegetable stand in a medium-sized community. Her weekly total revenue equals $2,000. Her weekly total cost of running the stand equals $3,500, consisting of 2,500 of variable costs and $1,000 of fixed costs. An economist would likely advise Darlene to:

a. shut down as quickly as possible in order to minimize her losses

(Table 13-2 with number of workers, total output, and marginal product) What is the marginal product of the first worker?

b. 200 units

The goal of a business firm is to make a profit. Tor F?

b. F

Under monopsony conditions

b. an individual buyer is unable to influence the price

Perfect competition is the term used to describe:

b. an industry in which numerous price-taking firms produce identical products

Price discrimination refers to:

b. charging different prices to different groups without a basis for doing so because of differences in production costs

The DeBeers Diamond Company, which owns most of the South African diamond production, has market power over the diamond trade. This market power was obtained through:

b. control of a scarce resource

Monopoly arises because:

b. entry to an industry is blocked

If a perfectly competitive firm has correctly made the decision to produce, but its marginal revenue is less that its marginal cost,

b. it would contract its output but not raise its price in order to increase its profits

Suppose that most people come to regard emeralds and sapphires as close substitutes for diamonds. Then DeBeers has

b. less market power than it would otherwise have

A perfectly competitive firm cannot make economic profits in the long run because:

b. there are no barriers to entry into the industry

(Table 14-9) If the firm produces 4 units of output,

b. total revenue is greater than variable cost

The following represents a portion of the demand schedule faced by a monopoly firm Price Quantity $12 1 $11 2 $10 3 $9 4 The marginal revenue of the third unit of output equals:

c. $8

(Table 14-9 with frequency, total revenue, and total cost) In order to maximize profit, the firm will produce a level of output where marginal cost is equal to

c. $9

(Table 13-2) At which number of workers does diminishing marginal product begin?

c. 3

Who is a price taker in a perfectly competitive market?

c. both buyers and sellers

Cold Duck Airlines flies between Tacoma and Portland. The company leases planes on a year-long contract at a cost that averages $600 per flight. Other costs are $550 per flight. Currently, Cold Duck's revenues are $1,000 per flight. All prices and costs are expected to continue at their present levels. If it wants to maximize profit, Cold Duck Airlines should

c. continue flying until the lease expires and then drop the run

If the total cost curve gets steeper as output increases, the firm is experiencing

c. diminishing marginal product

The fundamental reason that marginal cost eventually rises as output increases is because of

c. diminishing marginal product

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing

c. diminishing marginal product

A profit-maximizing firm that is operating in the short run will sell an additional unit of output as long as:

c. doing so adds more to revenue than it adds to cost

When the patents expires, the price of the patented good or service equally:

c. falls substantially

The perfectly competitive model assumes that:

c. firms can enter and exit the industry with relative ease

A market structure in which only one firm survives because of economies of scale (cost advantages of large scale production):

c. is called a natural monopoly

If a firm produces in the short run, the output where marginal revenue _______ is where profits are maximized.

c. is equal to marginal cost

Suppose that a price discriminating monopolist divides its market into two segments. If the firm sells its product for a price of $42 in the market segment where demand is more inelastic, then the price in the next segment where customer demand is more elastic will be

c. less than $42

As Bubba's Bubble Gum Company adds workers while using the same amount of machinery, some workers may be underutilized because they have little work to do while waiting in line to use the machinery. When this occurs, Bubba's Bubble Gum Company encounters

d. diminishing marginal product

Marginal revenue is:

c. the addition to total revenue from selling one more unit of output

Which of these assumptions is often realistic for a firm in the short run?

c. the firm can vary the number of workers it employs but not the size of its factory

An output level can maximize profit only if marginal profit at that output level is

c. zero

Suppose a perfectly competitive firm operates in the short run at a price that results in total revenue being greater than total cost. In the long run the firm should expect

d. all of the above (new firms to enter the market, the market price to fall, and its profits to fall)

(Figure 13-7) Which of the figures represents the total product curve for a typical firm?

d. figure 4 (curvy line going up)

The U.S. Postal Service has a monopoly over first-class mail delivery because of

d. government imposed barriers to entry

The marginal product of labor is equal to the

d. increase in output obtained from a one unit increase in labor

In the short run, a monopolist:

d. may make an economic loss, an economic profit, or zero economic profits

A firm that exits its market has

d. neither variable costs nor fixed costs

Why can't a firm in a perfectly competitive industry charge a price above the market equilibrium price?

d. numerous competitors produce the same product and charge the market price

Which of the following is not potentially a barrier to entry into a product market?

e. all of the above are potentially barriers to entry into a product market (patent protection on the design of the product, cost advantages to large scale production (economies of scale), government franchising of the production of the product, and the control of a crucial resource necessary to produce the product

The total revenue curve for a perfectly competitive firm

e. is a straight line from the origin with a positive slope equal to the price