Econ Final 3

Critics of the National Collegiate Athletic Association (NCAA) argue that the NCAA monopolizes college athletics and prevents student athletes from earning money while in college. If this is true, what type of entry barrier does the NCAA have? A. a patent B. a copyright C. control of a scarce resource or input D. economies of scale

C. control of a scarce resource or input

A monopoly responds to a decrease in marginal cost by _____ price and _____ output. A. increasing; decreasing B. increasing; increasing C. decreasing; increasing D. decreasing; decreasing

C. decreasing; increasing

It is common in large breweries for the long-run average total cost to decline as output increases. This indicates that many breweries operate with: A. diseconomies of scale. B. diminishing marginal returns. C. economies of scale. D. constant returns to scale.

C. economies of scale

Entry barriers: A. exist in all market structures. B. exist in perfect competition and monopolistically competitive markets. C. do not exist in any market structures; otherwise nothing would be produced. D. exist in monopoly and oligopoly markets.

D. exist in monopoly and oligopoly markets.

For a perfectly competitive firm, marginal revenue: A. is less than price. B. is greater than price. C. decreases as the firm increases output. D. is equal to price

D. is equal to price

The practice of charging different prices to different customers for the same good or service, even though the cost of supplying those customers is the same, is: A. privatization. B. monopolization. C. output competition. D. price discrimination

D. price discrimination

When marginal cost is ABOVE average variable cost, average variable cost must be: A. at its minimum. B. at its maximum. C. falling. D. rising.

D. rising.

A monopoly is MOST likely to be temporary if the monopoly power is derived from: A. high barriers to entry. B. a fundamental lack of substitutes for the monopolist's product. C. economies of scale. D. technological change.

D. technological change.

The perfectly competitive model does NOT assume: A. a great number of buyers. B. easy entry to and exit from the market. C. a standardized product. D. that firms attempt to maximize their total revenue.

D. that firms attempt to maximize their total revenue.

The long-run average total cost of producing 100 units of output is $4, while the long-run average cost of producing 110 units of output is $4. These numbers suggest that between 100 and 110 units of output, the firm producing this output has: A. economies of scale. B. diseconomies of scale .C. constant returns to scale. D. diminishing returns.

.C. constant returns to scale.

Darren runs a barbershop with average fixed costs of $60 per day and a total output of 50 haircuts per day.Darren shuts down every year during the last week of July and the first week of August (meaning it is open50 weeks a year). What is his annual fixed cost if he is open six days per week? A. $18,000 B. $3,000 C. $60 D. The answer cannot be determined with the information available.

A. $18,000

Table: Total Cost for a Perfectly Competitive Firm) Use Table: Total Cost for a Perfectly Competitive Firm.If the market price is $4.50, profit at the profit-maximizing quantity of output is: A. $2.00. B. $4.50. C. $5.00. D. $34.00.

A. $2.00.

Which good is MOST likely to display increasing marginal utility over some range?

paint, because you need enough to paint at least one entire room

Figure: Demand, Revenue, and Cost Curves) Use Figure: Demand, Revenue, and Cost Curves. Figglenuts-R-Us is a monopolist in the figglenut market. If the government wanted to regulate Figglenuts-R-Us such that the entire dead weight loss would be eliminated in the short run, it would impose a price ceiling of: A. $40. B. $46. C. $50. D. $65.

A. $40.

(Figure: The Average Total Cost Curve) Use Figure: The Average Total Cost Curve. The total cost of producing five pairs of boots is approximately: A. $408. B. $82. C. $108. D. $17.

A. $408.

(Table: Output and Costs) Use Table: Output and Costs. When output is 4, total variable cost equals: A. $48 B. $38 C. $58 D. $28

A. $48

(Table: Marginal Utility per Dollar of M&Ms) Use Table: Marginal Utility per Dollar of M&Ms. The price of M&Ms is $2 per bag. The marginal utility per dollar of the fourth bag of M&Ms is: A. 1. B. 2. C. 7.5. D. 15.

A. 1.

(Figure: Cost Curves for Corn Producers) Use Figure: Cost Curves for Corn Producers. The market for corn is perfectly competitive. If the price of a bushel of corn is $14, in the short run, the farmer will produce_____ of corn and earn an economic _____ equal to _____. A. 4 bushels; profit; $0 B. 4 bushels; profit; just less than $80 per bushel C. 2 bushels; profit; $0 D. 2 bushels; loss; just more than $80 per bushel

A. 4 bushels; profit; $0

If ATC is equal to MC, then the firm is operating: A. at the minimum point of ATC. B. on the downward-sloping portion of ATC. C. on the upward-sloping portion of ATC. D. with increasing returns to scale

A. at the minimum point of ATC.

(Figure: Short-Run Costs) Use Figure: Short-Run Costs. B is the _____ cost curve. A. average total B. average variable C. marginal D. total

A. average total

Conditions that keep new firms out of a monopoly market are: A. barriers to entry. B. terms of sale. C. labor market stipulations. D. production controls.

A. barriers to entry.

For a firm producing at any level of output GREATER than the most profitable one, a reduction in output decreases total revenue _____ total cost. A. by less than it decreases B. by more than it decreases C. by the same amount as it decreases D. but not

A. by less than it decreases

Joe's budget line reflects the _____ available to Joe if he spends _____ of his income. A. consumption bundles; all B. consumption bundles; part C. utility; all D. utility; part

A. consumption bundles; all

(Table: Tonya's Production Function for Apples) Use Table: Tonya's Production Function for Apples. As she hires more labor, Tonya's production function shows that the number of apples picked increases at a decreasing rate because of: A. diminishing returns. B. increasing returns. C. constant returns. D. workers becoming lazier.

A. diminishing returns.

The difference between total revenue and total cost is: A. economic profit or loss. B. nominal revenue. C. average revenue. D. marginal revenue.

A. economic profit or loss.

A university that benefits from lower costs per enrolled student as it builds more buildings and enrolls more students is an example of a service provider with: A. economies of scale. B. diseconomies of scale. C. increasing opportunity costs. D. scale reduction

A. economies of scale.

Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially inlong-run equilibrium, that the price of each candy cane is $0.10, and that the market demand curve is downward sloping. The price of sugar rises, increasing the marginal and average total cost of producing candy canes by $0.05; there are no other changes in production costs. In the long run, we will observe: A. firms leaving the industry. B. firms entering the industry. C. some firms entering and some firms leaving. D. neither entry to nor exit from the industry.

A. firms leaving the industry.

If a product's usefulness increases with the number of users, it: A. has network externalities. B. is a monopoly. C. is a conglomerate. D. has an exclusive franchise.

A. has network externalities.

To say that you can't have too much of a good thing means that, for any good that you enjoy (for example,pizza): A. higher consumption will always lead to higher utility. B. higher consumption will cause utility to decrease at an increasing rate. C. higher consumption will increase utility, but only up to a point; after that, utility will start to decrease. D. it is valid to measure utility in utils

A. higher consumption will always lead to higher utility.

Price discrimination leads to a _____ price for consumers with a _____ demand. A. higher; less elastic B. higher; more elastic C. higher; perfectly elastic D. lower; less elastic

A. higher; less elastic

A monopolist or an imperfectly competitive firm practices price discrimination primarily to: A. increase profits. B. expand plant size. C. lower total costs. D. reduce marginal costs.

A. increase profits.

When an increase in the firm's output reduces its long-run average total cost, it has _____ returns to scale. A. increasing B. decreasing C. constant D. variable

A. increasing

The profit-maximizing level of output for a perfectly competitive firm in the short run occurs where _____equals _____. A. marginal cost; price B. marginal revenue; price C. total revenue; total cost D. average revenue; average total cost

A. marginal cost; price

A perfectly competitive firm will maximize profits when the: A. marginal revenue equals marginal cost. B. marginal revenue is lower than average variable cost. C. price is lower than marginal cost. D. price is higher than marginal cost.

A. marginal revenue equals marginal cost.

The long run is a planning period: A. over which a firm can consider all inputs as variable. B. of at least five years. C. of more than six months. D. of six months to five years.

A. over which a firm can consider all inputs as variable.

A firm that faces a downward-sloping demand curve is a: A. price setter. B. quantity minimizer. C. quantity taker. D. price taker.

A. price setter.

When a firm cannot affect the market price of the good that it sells, it is said to be a: A. price taker. B. natural monopoly. C. dominant firm. D. cartel.

A. price taker.

George has a weekly income (I) of $50, which he uses to purchase doughnuts (D) and coffee (C). The price of a doughnut is $1 and the price of coffee is $2.50. Suppose George's income increases to $100 and the prices of both doughnuts and coffee remain unchanged. Given this income change, one would expect George's budget line to: A. shift to the right. B. shift to the left. C. rotate around the coffee axis point. D. not be affected.

A. shift to the right.

The larger the output, the more output over which fixed cost is distributed. Called the _____ effect, this leads to a _____ average _____ cost as output rises. A. spreading; lower; fixed B. spreading; higher; fixed C. diminishing returns; lower; variable D. diminishing returns; higher; variable

A. spreading; lower; fixed

The income effects of a change in price are most important for goods that: A. take up a substantial share of a consumer's spending. B. are very inexpensive. C. are imported. D. are normal.

A. take up a substantial share of a consumer's spending.

An oligopoly is characterized as an industry in which: A. there are few firms, each producing a differentiated or similar product. B. there are many firms, each producing a similar product. C. all market participants are price takers. D. only one firm produces a very differentiated product.

A. there are few firms, each producing a differentiated or similar product.

In the short run, the costs associated with variable inputs are _____, and the costs associated with _____inputs are _____. A. variable; fixed; fixed B. fixed; fixed; variable C. variable; fixed; variable D. fixed; fixed; fixed

A. variable; fixed; fixed

One government policy for dealing with natural monopoly is to: A. impose a price floor to eliminate the dead weight loss. B. impose a price ceiling to reduce economic profit. C. break it up into smaller firms. D. impose fines on the monopolist.

B. impose a price ceiling to reduce economic profit.

Krista's dry-cleaning business incurs $900 per month in fixed costs. Last month her total output was 3,000pounds of clothes. This month her total output fell to 2,700 pounds. This means her average fixed cost_____ by a little more than _____ cents. A. fell; 3.33 B. increased; 3.33 C. fell; 2.50 D. increased; 2.50

B. increased; 3.33

A monopolist is likely to produce _____ and charge _____ than is a comparable perfectly competitive firm. A. more; more B. less; more C. more; less D. less; less

B. less; more

Figure: The Total Product) Use Figure: The Total Product. After hiring L2 labor and producing at point B on the total product curve, hiring more labor beyond L2 would cause the: A. marginal product of labor to rise. B. marginal product of labor to be negative. C. total product to be negative. D. total product to be zero.

B. marginal product of labor to be negative.

Freddy has eaten three corn dogs at the county fair, and if he eats another, he will get sick on the roller coaster. Knowing this, and ignoring any impact that price might have on his decision, we can say that, for the fourth corn dog, the: A. total utility is less than zero. B. marginal utility is less than zero. C. total utility curve is still increasing. D. marginal utility curve is still increasing.

B. marginal utility is less than zero.

Most electric, gas, and water companies are examples of _____ monopolies. A. unregulated B. natural C. restricted-input D. sunk-cost

B. natural

If the price is greater than average total cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm will: A. produce at a loss. B. produce at a profit. C. shut down production. D. produce more than the profit-maximizing quantity.

B. produce at a profit.

Public policies toward monopoly in the United States often consist of: A. laws outlawing all of them. B. the regulation of natural monopolies. C. government takeover if monopoly profit exceeds a certain level. D. forcing monopoly industries to become perfectly competitive.

B. the regulation of natural monopolies.

(Figure: Short-Run Costs) Use Figure: Short-Run Costs. At the given price, the MOST profitable level of output occurs at quantity: A. N. B. P. C. S. D. T.

C. S.

(Figure: The Perfectly Competitive Firm) Use Figure: The Perfectly Competitive Firm. The figure shows a perfectly competitive firm that faces demand curve d and maximizes profit. Given the market price, the firm's total cost per day is: A. $475. B. $600. C. $900. D. $1,200.

B. $600.

(Figure: Cost Curves for Corn Producers) Use Figure: Cost Curves for Corn Producers. The market forcorn is perfectly competitive. If the price of a bushel of corn is $4, in the short run the farmer will produce_____ bushels of corn and earn an economic _____ equal to _____. A. 0; loss; average fixed costs B. 0; loss; total fixed costs C. 3; loss; $30 per bushel D. 3; profit; $20 per bushel

B. 0; loss; total fixed costs

(Table: Production of Bagels) Use Table: Production of Bagels. The marginal product of the fifth worker is_____ bagels. A. 5,000 B. 9,000 C. 10,000 D. 12,000

B. 9,000

(Table: Denise's Consumption of Coffee and Gasoline) Use Table: Denise's Consumption of Coffee and Gasoline. Denise will maximize her utility by consuming bundle: A. A. B. B. C. C. D. D.

B. B.

In the short run, a perfectly competitive firm produces output and earns ZERO economic profit if: A. P < ATC. B. P = ATC. C. P < MC. D. P > ATC.

B. P = ATC.

(Figure: Prices, Cost Curves, and Profits) Use Figure: Prices, Cost Curves, and Profits. If the price is P1 and the firm decides to produce at output Q1, then the firm earns: A. a loss equal to (ba) × Q1. B. a loss equal to (ca) × Q1. C. a loss equal to (bc) × Q1. D. zero.

B. a loss equal to (ca) × Q1.

(Figure: A Firm's Cost Curves) Use Figure: A Firm's Cost Curves. The curve labeled W represents the firm's_____ cost curve. A. average fixed B. average total C. average variable D. total variable

B. average total

Cindy operates Birds-R-Us, a small store manufacturing and selling 100 bird feeders per month. Cindy's monthly total fixed costs are $500, and her monthly total variable costs are $2,500. If for some reason Cindy's fixed cost fell to $400, then her _____ costs would _____. A. average fixed; increase B. average total; decrease C. marginal; decrease D. average variable; decrease

B. average total; decrease

If marginal cost is LESS than average total cost, then _____ cost is _____. A. average total; increasing B. average total; decreasing C. marginal; necessarily increasing D. marginal; necessarily decreasing

B. average total; decreasing

Diminishing marginal returns occur when: A. each additional unit of a variable factor adds more to total output than the previous unit. B. each additional unit of a variable factor adds less to total output than the previous unit. C. the marginal product of a variable factor is increasing at a decreasing rate. D. total product decreases.

B. each additional unit of a variable factor adds less to total output than the previous unit.

Because tourist demand for airline flights is relatively _____, small _____ in ticket price will result inrelatively _____ in additional tourists. A. inelastic; reductions; small increases B. elastic; reductions; large increases C. inelastic; increases; small decreases D. elastic; increases; small increases

B. elastic; reductions; large increases

Marginal revenue: A. is the slope of the average revenue curve. B. equals the market price in perfect competition. C. is the change in quantity divided by the change in total revenue. D. is the price divided by the change in quantity.

B. equals the market price in perfect competition.

A _____ is an organization that produces goods or services for sale. A. production function B. firm C. variable input D. fixed input

B. firm

. A cost that does NOT depend on the quantity of output produced is: A. marginal. B. fixed. C. variable. D. average.

B. fixed.

If the state government gave you the exclusive right to sell cement to municipalities, your monopoly would result from: A. sunk costs. B. government restrictions to entry .C. economies of scale. D. location.

B. government restrictions to entry

(Table: Lindsay's Farm) Use Table: Lindsay's Farm. Lindsay's variable costs of production: A. stay constant. B. are equal to 10. C. are zero when she produces no crops. D. fall as soon as she starts producing.

C. are zero when she produces no crops.

Austin's total fixed cost is $3,600 a month for making 100,000 cupcakes at his cupcake bakery. Austin employs 20 workers and pays each worker $600 a month. If labor is his only variable cost, what is Austin's total cost per month for making 100,000 cupcakes? A. $3,600 B. $1,200 C. $15,600 D. $12,000

C. $15,600

(Figure: Short-Run Costs II) Use Figure: Short-Run Costs II. At 6 units of output, average total cost is approximately: A. $100. B. $120. C. $170. D. $250.

C. $170.

(Table: Workers and Output) Use Table: Workers and Output. After graduation, you achieve your dream of opening an art shop that specializes in selling mud statues. You pay $10 per day on a loan from your uncle,regardless of how much you produce. You also pay $10 per day to each of the workers who you hire to make the mud statues. The variable cost of producing 43 statues is: A. $10. B. $20. C. $40. D. $43.

C. $40.

Table: Cost Data) Use Table: Cost Data. The average total cost of producing 6 purses is: A. $190. B. $70. C. $50. D. $35.

C. $50.

(Figure: Game-Day Shirts) Use Figure: Game-Day Shirts. Rick is one of 10 vendors who sell game-day T-shirts at football games in a perfectly competitive market. His costs are identical to the costs of the other 9vendors. If the industry is in long-run equilibrium, how many shirts will each vendor sell? A. 14 B. 20 C. 22 D. 24

C. 22

(Figure: Revenues, Costs, and Profits for Tomato Producers III) Use Figure: Revenues, Costs, and Profits for Tomato Producers III. The market for tomatoes is perfectly competitive. If the market price of a bushel of tomatoes is $14, in the short run the farmer's profit-maximizing output is _____ bushels. A. 2 B. 3 C. 4 D. 5

C. 4

Which cost concept is CORRECTLY defined? A. MC = ΔTC/ΔFC B. ATC = VC + FC C. ATC = AVC + AFC D. TC = AVC + AFC

C. ATC = AVC + AFC

(Figure: Budget Lines for Tea and Scones) Use Figure: Budget Lines for Tea and Scones. For months now,Agnes has had $20 per month to spend on tea and scones. The price of each cup of tea and each scone hasbeen $1. Which chart shows what will happen to her budget line if the price of both a cup of tea and a scone increase to $2? A. A B. B C. C D. D

C. C

Brad spends all of his income on cameras and coffee. He is purchasing the consumption bundle that maximizes his utility given his budget constraint. At the optimal consumption bundle, which statement is CORRECT? A. If cameras cost more than coffee, then the marginal utility of cameras is less than that of coffee. B. If cameras cost less than coffee, then the marginal utility of cameras is more than that of coffee. C. If cameras cost the same as coffee, then the marginal utility of cameras is equal to that of coffee. D. The prices of cameras and coffee and their marginal utilities are unrelated.

C. If cameras cost the same as coffee, then the marginal utility of cameras is equal to that of coffee.

A perfectly competitive industry is in a state of long-run equilibrium. Which expression must be TRUE? A. P = MR = MC > ATC. B. P = MR = MC < AVC. C. P = MR = MC = ATC. D. P > MR = MC = AVC

C. P = MR = MC = ATC.

(Figure: Computing Monopoly Profit) Use Figure: Computing Monopoly Profit. At the profit-maximizing output, total cost is: A. P10QG. B. P30QE. C. P20QF. D. FQ2.

C. P20QF.

In perfect competition, a change in fixed cost will: A. cause a change in the price in the short run. B. cause a change in output in the short run. C. encourage entry or exit in the long run such that price will change enough to leave firms earning zero profits. D. cause a change in variable cost.

C. encourage entry or exit in the long run such that price will change enough to leave firms earning zero profits.

In a monopoly in the long run: A. economic profits will be eliminated by the entry of rival firms. B. economic profits will be reduced but not eliminated by the entry of rival firms. C. entry by other firms will not occur. D. the price will be the same as if the market were perfectly competitive.

C. entry by other firms will not occur.

Goods that are subject to network externalities tend to be ones: A. for which the value of the good to an individual is lower when more people use it. B. that are land-intensive. C. for which the value of the good to an individual is higher when more people use it. D. for which one person owning the good enhances its value because it's the only one.

C. for which the value of the good to an individual is higher when more people use it.

(Table: Output and Marginal Cost) Use Table: Output and Marginal Cost. After graduation, you achieve your dream of opening an art shop that specializes in selling mud statues. How many statues should you produce to minimize your average variable costs? A. two B. three C. four D. five

C. four

(Table: Bonnie's Production Function for Good Z) Use Table: Bonnie's Production Function for Good Z.Diminishing returns to labor begin to kick in after Bonnie hires the _____ worker. A. second B. third C. fourth D. fifth

C. fourth

A natural monopoly is one that: A. monopolizes a natural resource such as a mineral spring. B. is based on control of something occurring in nature (such as diamonds). C. has increasing returns to scale over the entire relevant range of output. D. typically has low fixed costs, making it easy and "natural" for it to shut out competitors.

C. has increasing returns to scale over the entire relevant range of output.

(Figure: Long-Run Average Cost) Use Figure: Long-Run Average Cost. This firm has _____ in the output region from 0 to A. A. decreasing returns to scale B. constant returns to scale C. increasing returns to scale D. negative costs of production

C. increasing returns to scale

If Marie Marionettes is operating under conditions of diminishing marginal product, the marginal costs will be: A. equal to average total cost. B. decreasing. C. increasing. D. constant.

C. increasing.

A curve that shows the quantity of a good or service supplied at various prices after all long-run adjustments to a price change have been completed is a long-run _____ curve. A. marginal revenue B. marginal cost C. industry supply D. production

C. industry supply

The principle of diminishing marginal utility means that, when Sarah eats pizza, her satisfaction from the second slice of pizza is probably _____ that from the first. A. greater than B. equal to C. less than D. not comparable to

C. less than

Marginal revenue for a monopolist is: A. equal to price. B. greater than price. C. less than price. D. equal to average revenue.

C. less than price.

The shape of the marginal cost curve is the mirror image of the shape of the _____ curve. A. total product B. average product C. marginal product D. average total cost

C. marginal product

Microsoft and its operating system are often cited as an example of a company that grew into a monopolist through: A. ownership of a resource. B. patents. C. network externalities. D. large economies of scale.

C. network externalities.

The slope of a long-run average total cost curve exhibiting decreasing returns to scale is: A. zero. B. infinite. C. positive. D. negative

C. positive.

In the short run: A. all inputs are fixed. B. all inputs are variable. C. some inputs are fixed and some inputs are variable. D. all costs are variable.

C. some inputs are fixed and some inputs are variable.

Perfect competition is characterized by: A. rivalry in advertising. B. fierce quality competition. C. the inability of any one firm to influence price. D. widely recognized brands.

C. the inability of any one firm to influence price.

(Table: Costs of Birthday Cakes) Use Table: Costs of Birthday Cakes. Assume that fixed costs are $10.What is the average total cost of 4 cakes? A. $35.00 B. $25.00 C. $9.50 D. $12.00

D. $12.00

Table: Production Function for Soybeans) Use Table: Production Function for Soybeans. Assume that the fixed input, capital, is 10 acres of land and a tractor, which have a combined cost of $150 per day. The cost of labor is $100 per worker per day. The variable cost of producing 60 bushels of soybeans is: A. $5. B. $100. C. $150. D. $300

D. $300

(Table: Total Cost and Output) Use Table: Total Cost and Output, which describes Sergei's total costs for his perfectly competitive all-natural ice cream firm. If the market price of a tub of ice cream is $50, how much is Sergei's profit at the profit-maximizing output? A. $680 B. $330 C. $150 D. $40

D. $40

Figure: Monopoly Model) Use Figure: Monopoly Model. When the firm is in equilibrium (that is, maximizing its economic profit), its total cost is the area of rectangle: A. 0PDJ. B. 0IHJ. C. IPDH. D. 0SBJ.

D. 0SBJ.

Adam has a monthly income of $20 that can be spent on books (B) and pencils (P). The price of a book is$5 and the price of a pencil is $0.50. Which bundle of books and pencils is affordable for Adam, but does not use all of his income? A. 1 book and 30 pencils B. no books and 40 pencils C. 2 books and 20 pencils D. 1 book and 22 pencils

D. 1 book and 22 pencils

Which scenario is MOST likely to cause firms to exit a perfectly competitive industry? A. Consumer tastes and preferences for this product get stronger, making them more interested in the good. B. A technological advance allows all firms to produce more efficiently. C. The price of a key variable input falls. D. Consumer income falls.

D. Consumer income falls.

(Figure: A Perfectly Competitive Firm in the Short Run) Use Figure: A Perfectly Competitive Firm in the Short Run. If the market price is G, the firm's total economic profit at its most profitable level of output is: A. 0GHB. B. EFJS. C. EGHS. D. FGLK.

D. FGLK.

(Figure: Total Revenue and Total Cost) Use Figure: Total Revenue and Total Cost. The MOST profitable level of output occurs at quantity: A. F. B. K. C. L. D. M.

D. M.

Which statement about the differences between monopoly and perfect competition is INCORRECT? A. A monopolist has market power, while a perfect competitor does not. B. Unlike a perfectly competitive firm, a monopoly can make positive economic profits in the long run. C. A monopoly will charge a higher price and produce a smaller quantity than will a competitive market with the same demand and cost structure. D. Monopoly profits can continue in the long run because the monopoly produces more and charges a higher price than does a comparable perfectly competitive industry

D. Monopoly profits can continue in the long run because the monopoly produces more and charges a higher price than does a comparable perfectly competitive industry

Which statement is NOT a characteristic of a perfectly competitive industry? A. Firms seek to maximize profits. B. Profits may be positive in the short run. C. There are many firms. D. Products are differentiated.

D. Products are differentiated.

The long-run average total cost curve is tangent to an infinite number of short-run _____ cost curves. A. total B. marginal C. average variable D. average total

D. average total

If a perfectly competitive firm is producing a quantity where P < MC, then profit: A. is maximized. B. can be increased by decreasing the price. C. can be increased by increasing production. D. can be increased by decreasing production.

D. can be increased by decreasing production.

(Figure: Long-Run Average Cost) Use Figure: Long-Run Average Cost. This firm has _____ in the output region from A to B. A. constant returns to scale B. economies of scale C. diseconomies of scale D. constant total cost as output increases

D. constant total cost as output increases

The term diminishing returns refers to a: A. falling interest rate that can be expected as one's investment in a single asset increases. B. reduction in profits caused by increasing output beyond the optimal point. C. decrease in total output due to the firm hiring uneducated workers. D. decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant.

D. decrease in the extra output due to the use of an additional unit of a variable input when all other inputs are held constant.

A Giffin good is one in which the _____ curve is _____ sloping. A. supply; downward B. demand; downward C. supply; upward D. demand; upward

D. demand; upward

At the profit-maximizing level of production, a perfectly competitive industry will produce an _____ amount of output, and a monopolist produces an _____ amount of output. A. efficient; efficient B. inefficient; efficient C. inefficient; inefficient D. efficient; inefficient

D. efficient; inefficient