econ exam 2

By 2007, US market deregulation has proven to be most toxic to the overall health of the US economy in the ________________.

banking sector

Occasionally, ________________ may lead to pure monopoly; in other market conditions, they may limit competition ______________________-.

barriers to entry; to a few oligopoly firms

For a monopolistic firm, the demand for its product is

completely inelastic

The form of legal protection intended to prevent reproduction of original works is referred to as _________ law.

copyright

Intellectual property law is a body of law that includes

copyright legislation, as well as all of the above

The ______________ of all firms can be broken down into some common underlying patterns.

cost structure

Which of the following falls outside of the classification of business expenses that fall into the category of fixed costs?

costs incurred in the act of producing

Which of the following falls outside of the classification of business expenditures that fall into the category of variable costs?

costs of research and development

The graph above illustrates the total cost function for GoodieCookie Co. The changing slope of the total cost curve reflects this company's

decreasing marginal costs

If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.

decreasing returns to scale

The two primary factors determining monopoly market power are the firm's

demand curve and its cost structure

Which of the following is most unlikely to present a barrier to entry into a market?

deregulation

In microeconomics, the term ___________________ is synonymous with decreasing returns of scale

diseconomies of scale

If a solar panel manufacturer wants to look at its total costs of production in the short run, which of the following would provide a useful starting point?

divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be

A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.

fixed costs; do not change

In microeconomics, the term _____________________ is synonymous with economies of scale

increasing returns to scale

In the business world, a __________ is recognized as a legally acceptable way for any business to keep knowledge of its particular methods of production from being known by competing firms.

trade secret

If a paper mill shuts down its operations for three months so that it produces nothing, its __________________ will be reduced to zero?

variable costs

occur when the marginal gain in output diminishes as each additional unit of input is added.

Diminishing marginal returns

The US laws dealing with original works of authorship allow the US Copyright Office to enforce protection for all but one of the following. Which one is it?

ancient Bible texts

The graph above illustrates the total cost function for GoodieCookie Co. How are the company's fixed costs represented in this graph?

as the point where the total cost curve touches the vertical axis

In order to determine ____________, the firm's total costs must be divided by the quantity of its output.

average cost

For a pure monopoly to exist

there is a single seller in a particular industry

When a firm pursues a predatory pricing strategy, it does so

to maximize profits in the long run

Approximately what percentage of the US labor force is employed by firms that have fewer than 100 employees?

. 35%

In the US economy, nearly half of all the workers employed by private firms work at

18,000 large firms that employ more than 500 workers

In the United States, a pharmaceutical company's exclusive patent rights last for

20 years

The US government has registered ________ on behalf of business firms to protect a particularly distinct element each has selected for its ability to aid consumers to easily

800,000 trademarks; identify the source of goods

Mindy's company manufactures rubber balls used by elementary schools for playground activities. The table below sets out her firm's production cost information. Some values are missing. Which of the following statements is correct?

A = 20; E = 5

The table below sets out cost information for the production of volley balls. Some values are missing. Which of the following statements is correct?

A = 42, E = 12

arises where many firms are competing in a market to sell similar but differentiated products.

Monopolistic competition

___________ include all spending on labor, machinery, tools, and supplies purchased from other firms.

Total costs

is calculated by taking the quantity of everything that is sold and multiplying it by the sale price.

Total revenue

include all of the costs of production that increase with the quantity produced

Variable costs

In economics, a firm that faces no competitors is referred to as

a monopoly

A firm that holds a monopoly position in the market place is

a price maker

Which one of the following is the most accurate description of a monopolist?

a sole producer of a product for which good substitutes are lacking in a market with high barriers to entry

If monopolists are able to produce fewer goods and sell them at a higher price than they could under perfect competition, the result will be

abnormally high sustained profits

In order to reduce the harmful affects of recession and carbon emissions, the government provided tax incentives for manufacturing firm's to ___________________ that provide alternative, more efficient methods of combining inputs to produce output.

acquire energy efficient production technologies

The marginal revenue curve for a monopolist _________ the market demand curve

always lies beneath

According to the definition of profit, if a profit-maximizing firm will always attempt to produce its desired level of output at the lowest possible cost, then it will

do so regardless of what type of competition exists in a market.

The slope of the demand curve for a monopoly firm is

downward sloping

Copyright protection legislation provides protection for original works

during the author's life plus 70 years

The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls.

economies of scale

Once I'MaPharmaCo. has received confirmation of the registration for its latest drug patent application, it will have created a monopoly for that product by restricting

entry into the market

When J.K. Rowling exerts copyright ownership of her literary works, she creates a monopoly by restricting

entry into the market.

If the North American newsprint paper market has barriers to entry, then

entry will be blocked even if firms are earning high profits.

The term "constant returns to scale" describes a situation where

expanding all inputs does not change the average cost of production

A natural monopoly occurs when the quantity demanded is ____________ the minimum quantity it takes to be at the bottom of the long-run average cost curve.

less than

Which of the following is most likely to be a monopoly?

local electricity distributor

If the firm produces 5 units that it sells at a price of $30.00 each, what will its profits or losses equal?

losses equal $5

When a natural monopoly exists in a given industry, the per-unit costs of production will be

lowest when a single firm generates the entire output of the industry.

The term _____________ is used to describe the additional cost of producing one more unit.

marginal cost

The largest cattle rancher in a given region will be unable to have a _____________ sufficient numbers of smaller cattle ranchers provide sources of competition

monopoly

A ___________ exists when the quantity demanded in the market is less than the quantity at the bottom of the long-run average cost curve.

natural monopoly

Deregulation occurs when a government eliminates or scales back rules relating to all but one of the following. Which one is it?

natural monopoly

Roughly speaking, patent law covers ____________ and ___________ law protects an author's original books.

original inventive creations; copyright

Following the assumption that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency?

output will be too small and its price too high

Government _____________ regulations specify that inventors will maintain exclusive legal rights to their respective inventions for _______________.

patent; a limited time

Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?

physical space for the gallery

The use of sharp, temporary price cuts as a form of ________ would enable traditional US automakers to discourage new competition from smaller electric car manufacturers

predatory pricing

Why would labor be treated as a variable cost?

producing larger quantities of a good or service generally requires more workers

A monopolist is able to maximize its profits by

producing output where MR = MC and charging a price along the demand curve

If the firm produces 5 units that it sells for $39.00 each, what will its profits or losses equal?

profits equal $40

In the event that Only1Corp. obtains control of all the natural gas producers in the US, it would most likely

raise prices, cut production, and realize positive economic profits

If this information were used to create a total cost graph, the curve should

reflect all of the above

What qualities would ideally suit a monopolistic firm with regard to barriers to entry?

sufficient strength to prevent or discourage potential competitors from entering the market

If it was possible for one company to gain ownership control all of the uranium processing plants in the US, then

that firm could set up barriers to entry to discourage competition.

Which of the following will present the least amount of concern to a firm that has a monopoly over a particular industry?

the competitive actions of other business firms

When the demand for a good or service limits the quantity that can be sold to an output at which the firm experiences economies of scale

the firm is a natural monopoly

In order to determine the average variable cost, the firm's variable costs are divided by

the quantity of output