ECON Exam 2 Questions

Marginal Utility:

Declines with each additional utility

Which of the answer choices lists market structures in order from the highest number of sellers to the lowest?

Perfect comp......

Limited liability is important in encouraging institution that transforms ____ of production into ____ for consumers:

it lowers risk

product differentiation:

reduces price elasticity of demand

A natural monopoly could possibly arise when:

there are large economies of scale

Suppose that Bob has left a job that paid $50,000 per year in order to open a new sponge business. His insurance cost is $5,000, his materials cost $25,000, his lease is $10,000 and his sales revenue is $90,000. Bob's economic profit is:

$0

Based on the graph, if the marginal cost of production is constant at $20 per unit produced, then the monopolist will earn a profit of:

$800

Based on the table, the marginal cost of the fourth unit produced is:

$98

A consumer has 30 to spend on movies or books. Based on the table, the consumer has maximized his utility at which combination of goods?

2 movies, 6 books

Based on graph.... Monopolist would produce—— while perfect competitors would produce——. :

20 units; 40 units

A monopolist will maximize:

MR=MC

Sunk cost:

Rose bought a mattress

The idea that each additional unit offers less additional satisfaction when additional units of product are consumed is known as:

diminishing marginal utility

All of these are included in implicit cost, EXCEPT:

expenditures for raw materaials

Based on the graph under monopolistic competition the price for this good or service will be:

f

A monopolist charges a price of

higher; less

As a person consumes more of a particular good or service, the total level of utility derived from that consumption will:

increase at a decreasing rate

A firm is an economic institution that transforms ____ of production into ____ for consumers:

inputs; outputs

Which sequence describes the long run adjustment process:

new firms enter, industry supply inc, market price ---

In the long run perfectly competitive firms earn:

normal profits

Before deciding on pricing strategy, Worldwide Widgets consults with its market intelligence team to understand what discounts the Gargantuan Gizmo Company is offering. The model that BEST fits this industry is:

oligopoly

Which of these is NOT typical in the long run?

output will vary only with changes in the labor force

the demand curve for an individually perfect competition

perfectly elastic

A perfectly competitive firm:

price is below the average variable cost at all rates of output

____ is the process by which products are produced and sold to consumers at their lowest opportunity cost.

productive efficiency

Assume that at a given level of output, a monopoly firm has marginal revenue of $9, its average total cost is $9, and marginal cost is $7. If this firm were to continually increase its output, then:

profits will increase

If you drop a course after the refund date, the non-refundable tuition that you have paid is:

sunk cost

The demand curve that the monopolist face is:

the market demand curve

In general, marginal product equals average product at:

the maximum average product

All of these are explicit costs, EXCEPT:

the salary an entrepreneur could have earned in a corporate job

Sole proprietors and partnerships share the characteristics of:

unlimited liability

The idea that monopolies

x-inefficiency

Normal profit is equal to:

zero economic proft

one way to achieve product differentiation:

clever product labeling and labeling always

Which of these is NOT a characteristic of a monopoly?

close substitutes for the monopolist product are available to buyers

If a perfectly competitive firm is incurring an economic loss it should:

continue