Econ

Because of the law of diminishing returns, ______ costs eventually ______ as more units of output are produced. Multiple choice question. marginal; fall total; fall marginal; rise total; disappear

Marginal; Rise

In a market economy, how businesses decide the amount of a product to produce and the price they should charge for the product depends on the _____ _____ in which they operate.

Market structure

Which choice best completes the following statement. In a market economy, how much of a product a business should produce and the price it should sell the product for essentially depend on Multiple choice question. The productivity level of each employee The type of market structure that the business is a part of The ultimate goal of the business to make a profit The inefficiencies within the business

The type of market structure that the business is a part of

In a purely competitive market, price per unit to a buyer equals: Multiple choice question. average profits to a seller total profits to a seller average revenue to a seller total revenue to a seller

average revenue to a seller

Pure ______ involves a very large number of firms. Multiple choice question. monopoly competition oligopoly

competition

Economists group industries into ____ distinct market structures

four

The quantity of a product supplied by a firm in pure competition should _____ as long as price rises. Multiple choice question. decrease increase remain constant

increase

___ revenue is the additional revenue that an additional unit of ___ would add to total revenue.

marginal output

_____ competition is considered to be rare in the real world.

pure

All of the following statements describe a purely competitive market, except: Multiple choice question. stock market. many independently acting sellers. a single seller selling only in national market. selling in both national and international markets. foreign exchange market.

A single seller selling only in national market.

Which of the following best describes pure competition? Multiple choice question. An industry involving two firms producing identical products and in which new firms can enter or exit the industry very easily. An industry involving a few firms producing identical products and in which new firms cannot enter or exit the industry very easily. An industry involving one large firm producing many products and in which new firms cannot enter or exit the industry very easily. An industry involving a very large number of firms producing identical products and in which new firms can enter or exit the industry very easily.

An industry involving a very large number of firms producing identical products and in which new firms can enter or exit the industry very easily.

In this graph, the first unit of output sold increases total revenue from zero to $131, so marginal revenue for that unit is $131. The second unit sold increases total revenue from $131 to $262 and marginal revenue is again $131. The third unit sold increases total revenue to ______ and marginal revenue is now ______. Multiple choice question. $393; $131 $131; $131 $262; $393 $131; $393 $393; $262

$393; $131

Which of the following explains why a purely competitive firm is a price taker? Multiple choice question. A purely competitive firm offers only a negligible fraction of total market supply and therefore must set the price for the market A purely competitive firm offers a large fraction of total market supply and therefore determines market price A purely competitive firm offers only a negligible fraction of total market supply and therefore must accept the price determined by the market A purely competitive firm produces all of total market supply and therefore must accept the price determined by the market

A purely competitive firm offers only a negligible fraction of total market supply and therefore must accept the price determined by the market

In the short run, a purely competitive firm will maximize profit by producing up to the point where marginal revenue is equal to marginal cost if Multiple choice question. market price is less than average variable cost. market price exceeds average variable cost.

market price exceeds average variable cost

All of the following describe the characteristics of the four market models, except:

whether a firm is privately or publicly held

Select all that apply Which of the following factors will alter costs and shift the marginal cost or short-run supply curve to a new location? Multiple select question. Substitute goods Prices of variable inputs Technology Population and demographics

Prices of variable inputs and technology

Which of the following are considered the four basic market structures? Multiple select question. Pure competition Capitalism Monopolistic competition Pure monopoly Oligopoly

Pure competition Monopolistic competition Pure monopoly Oligopoly

In pure competition, to calculate economic profit, we first calculate the difference between product _____ or _____ revenue and average total cost and then multiply it by output.

price; marginal

A purely competitive firm is a price _____.

taker

A firm operating in a purely competitive market is a price taker because it ______. Multiple choice question. cannot change the market price in the long run can change the market price in the short run cannot change the market price, it can only adjust to it can change the market price in the long run

cannot change market price, it can only adjust to it

Marginal revenue is the _____ in total revenue that results from selling _____ more unit (extra unit) of output.

change; one

The demand curve for a purely competitive firm is perfectly elastic because _____. Multiple choice question. it cannot obtain a higher price by increasing its output, nor does it need to lower its price to increase its sales volume it cannot obtain a higher price by restricting its output, nor does it need to lower its price to increase its sales volume it cannot obtain a lower price by restricting its output, nor does it need to lower its price to increase its sales volume it cannot obtain a higher price by restricting its output, nor does it need to raise its price to increase its sales volume

it cannot obtain a higher price by restricting its output, nor does it need to lower its price to increase its sales volume

All of the following describe the characteristics of the four market models, except: Multiple choice question. the ease or difficulty of entry into an industry whether a firm produces a standardized product whether a firm attempts to differentiate its products from other firms the number of firms in the industry whether a firm is privately or publicly held

whether a firm is privately or publicly held

Select all that apply Market models are distinguished based upon differences in: Multiple select question. conditions of entry the number of firms conditions of profits type of product non-price competition

- number of firms - conditions on entry - non-price competition - types on product

Select all that apply In a purely competitive industry, at profit-maximization or loss-minimization, marginal ______ is equal to ______. Multiple select question. output; marginal cost revenue; price revenue; marginal cost cost; price

-revenue; marginal cost -cost; price -revenue; price

Select all that apply Which of the following are conditions necessary to have pure competition? Multiple select question. barriers to entry price searchers free entry and exit standardized product very large number of firms or sellers

-very large number of firms or sellers -standardized product -free entry and exit

Which of the following best describes a pure monopoly? Multiple choice question. Many firms selling a single unique product, where entry of additional firms is blocked and product differentiation is not an issue. One firm selling a single unique product, where entry of additional firms is blocked and product differentiation is not an issue. One firm selling differentiated products or services and in which entry of additional firms is blocked. One firm selling a single unique product, with ease of entry into the industry and product differentiation is not an issue.

One firm selling a single unique product, where entry of additional firms is blocked and product differentiation is not an issue.

In the table, this firm's economic profit at the profit-maximizing level of output can easily be calculated using which of the following formulas? Multiple choice question. Price of $131 minus average fixed cost of $11.11 multiplied by quantity or output Price of $131 minus average variable cost of $86.67 multiplied by quantity or output Total revenue of $1179 minus total cost of 97.78 multiplied by quantity or output Price of $131 minus average total cost of $97.78 multiplied by quantity or output Total cost of $97.78 minus price of $131 multiplied by quantity or output

Price of $131 minus average total cost of $97.78 multiplied by quantity or output

Total revenue equals ______ times ______. Multiple choice question. average revenue; demand average revenue; price price; quantity demand; quantity

Price x Quantity

Total revenue equals ______ times ______. Multiple choice question. demand; quantity average revenue; demand average revenue; price price; quantity

Price x Quantity

Which of the following improves as production increases? Multiple choice question. Opportunity cost Fixed costs Price-marginal cost relationship Price-marginal revenue relationship

Price-marginal cost relationship

Which of the following improves as production increases? Multiple choice question. Price-marginal revenue relationship Opportunity cost Fixed costs Price-marginal cost relationship

Price-marginal cost relationship Price-marginal revenue relationship Reason: Remember that in the very early stages of production, marginal product is low, making marginal cost unusually high. With increased production, the price-marginal cost relationship improves. Opportunity cost Reason: Remember that in the very early stages of production, marginal product is low, making marginal cost unusually high. With increased production, the price-marginal cost relationship improves. Fixed costs Reason: Remember that in the very early stages of production, marginal product is low, making marginal cost unusually high. With increased production, the price-marginal cost relationship improves. Price-marginal cost relationship Reason: Remember that in the very early stages of production, marginal product is low, making marginal cost unusually high. With increased production, the price-marginal cost relationship improves.

Which of the following factors will alter costs and shift the marginal cost or short-run supply curve to a new location?

Prices of variable inputs & Technology

______ is relatively rare in the real world, although this market model is highly ______ to several industries. Multiple choice question. Pure competition; relevant Oligopoly; relevant Pure monopoly; irrelevant Monopolistic competition; relevant

Pure competition; relevant

A firm operating in a purely competitive market is a price taker because it ______. Multiple choice question. can change the market price in the short run cannot change the market price, it can only adjust to it can change the market price in the long run cannot change the market price in the long run

cannot change market price, it can only adjust to it

In a perfectly competitive market, the demand curve for an individual firm is perfectly _____ at the market price.

elastic/horizontal/f;at/constants/fixed

True or false: A purely competitive firm in the short run will maximize profit by producing up to the point where marginal revenue is equal to marginal cost if the market price is less than minimum average variable cost.

false A purely competitive firm will maximize profit by producing up the point where marginal revenue is equal to marginal cost if the market price exceeds the minimum average cost

True or false: A pure monopoly involves a very large number of firms producing a single unique product.

false a pure monopoly involves one firm or seller producing a single unique product

In pure competition, economic profit is calculated as ______ or ______. (Enter only one word per blank.) Multiple select question. price minus average variable cost multiplied by quantity total revenue minus average total cost multiplied by the marginal product of labor Reason: Recall that price is equal to marginal revenue in a purely competitive market. price minus average total cost multiplied by quantity price minus average total cost plus quantity marginal revenue minus average total cost multiplied by quantity Reason: Recall that price is equal to marginal revenue in a purely competitive market.

price minus average total cost multiplied by quantity marginal revenue minus average total cost multiplied by quantity

Select all that apply In pure competition, economic profit is calculated as ______ or ______. (Enter only one word per blank.) Multiple select question. total revenue minus average total cost multiplied by the marginal product of labor price minus average total cost plus quantity price minus average variable cost multiplied by quantity price minus average total cost multiplied by quantity marginal revenue minus average total cost multiplied by quantity

price minus average total cost multiplied by quantity marginal revenue minus average total cost multiplied by quantity

A ___ competitive firm's average-revenue schedule is also known as its demand schedule.

purely

In a purely competitive market, price per unit to the purchaser is synonymous with _____ per unit or _____ revenue to a seller.

revenue; average

Firms within pure competition are considered to be price _____.

takers

Changes in _____ and changes in prices of variable inputs alter costs and shift the marginal cost or short run supply curve.

technology

Which of the following best describes marginal revenue? Multiple choice question. The additional or extra revenue that total output contributes to total revenue. The additional or extra revenue that an additional or extra unit of output contributes to average revenue. The total revenue that an additional or extra unit of output contributes to marginal revenue. The additional or extra revenue that an additional or extra unit of output contributes to total revenue.

the additional or extra revenue that an additional or extra unit of output contributes to total revenue

A firm will break even where ______ will just cover ______ because the revenue per unit and the average total cost per unit are equal. Multiple choice question. marginal cost; marginal revenue total revenue; total cost marginal revenue; total cost total revenue; marginal cost

total revenue - total cost

A firm will break even where ______ will just cover ______ because the revenue per unit and the average total cost per unit are equal. Multiple choice question. total revenue; marginal cost marginal cost; marginal revenue total revenue; total cost marginal revenue; total cost

total revenue - total cost

All of the following describe the characteristics of the four market models, except: Multiple choice question. the ease or difficulty of entry into an industry the number of firms in the industry whether a firm produces a standardized product whether a firm attempts to differentiate its products from other firms whether a firm is privately or publicly held

whether a firm is privately or publicly held

Select all that apply From an economic standpoint, the break-even point is the level of output at which a firm makes ______ profit. Multiple select question. an economic an accounting a normal a zero

zero; normal

Which of the following best explains why the price-marginal cost relationship improves as production increases? Multiple choice question. At the very early stages of production, marginal product is high, making marginal cost unusually high. Reason: The marginal product of labor and marginal costs are inversely related. This option describes a positive or direct relationship. At the very early stages of production, marginal revenue is low, making marginal cost unusually high. Reason: Marginal costs are affected by the marginal product of labor, not marginal revenue. At the very early stages of production, marginal product is low, making marginal cost unusually high. At the very late stages of production, marginal product is low, making marginal cost unusually high.

At the very early stages of production, marginal product is low, making marginal cost unusually high.

True or false: Because of the law of diminishing returns, marginal costs eventually fall as more units of output are produced.

False

True or false: Quantity supplied increases as price decreases and economic profit is usually higher at lower product prices and output.

False

true or false: Quantity supplied increases as price decreases and economic profit is usually higher at lower product prices and output.

False

Which of the following best describes the economic break-even point? Multiple choice question. The point where total revenue covers all explicit costs Reason: When revenue covers all explicit costs, in accounting terms, break-even has occurred. The point where marginal revenue covers all costs, including implicit and explicit costs The point where total revenue covers all costs, including implicit and explicit costs

The point where total revenue covers all costs, including implicit and explicit costs

elect all that apply A purely competitive firm's demand schedule equals its: Multiple select question. total-revenue schedule. marginal-revenue schedule. average-revenue schedule.

average-revenue schedule & marginal-revenue schedule

The profit-maximizing rule of MR=MC states that: Multiple choice question. in the short-run, the firm will maximize profit or minimize loss by producing the output at which marginal revenue exceeds marginal cost in the short-run, the firm will maximize profit or minimize loss by producing the output at which marginal revenue equals marginal cost in the short-run, the firm will maximize profit or minimize loss by producing the output at which total revenue equals total cost in the long-run, the firm will maximize profit or minimize loss by producing the output at which marginal revenue equals marginal cost

in the short-run, the firm will maximize profit or minimize loss by producing the output at which marginal revenue equals marginal cost

A basic feature of the purely competitive market is the presence of ______. Multiple choice question. high barriers to entry differentiated prices a large number of sellers differentiated products

large number of sellers

Which of the following best describes the situation of a price-taking firm? A price-taking firm is one of a ______ number of firms producing a product that is identical to that of every other firm in the industry and providing ______ of total market supply. Multiple choice question. large; only a fraction small; only a fraction Reason: It is one of a large number of firms. large; a large share Reason: A price taker provides a small amount or fraction of the total supply. small; a large share Reason: It is one of a large number of firms.

large; only a fraction