Micro
ATC=
AFC+AVC
The activity of rent seeking shifts the firm's_____ curve upward
ATC
over the output range for which marginal cost exceeds average variable cost but is less than average total cost,____
average fixed cost is falling more quickly than average variable cost is rising
the long run average cost curve traces out the lowest attainable_____ of producing each output
average total Cost
A firm experiences constant returns to scale when____
average total cost does not change when output changes; The LRAC curve is horizontal.
the output at which average product is a maximum is the same output a which ____ is a minimum
average variable cost
the output range over which average product increases is the output range over which____
average variable cost decreases
A monopoly arises two key factors, which are___
barriers to entry and no close substitutes
A single price monopoly_____
can sell a larger quantity only by setting a lower price
to increase output in the long run, a firm can_____
choose whether to change its plant as well as the quantity of labor it hires
When the firm cannot lower its average total cost by changing its plant, then it is operating on its long run average cost curve at a point with____
constant returns to scale
When a firm practices perfect price discrimination_____
consumer surplus is eliminated, it sells each unit of output for the highest price someone is willing to pay for it, the demand curve becomes the marginal revenue curve.
When a monopoly that produces a service practices perfect price discrimination,_____
consumer surplus is zero
at competitive equilibrium, the sun of _____ and ____ is _____
consumer surplus; producer surplus; maximized
TC
cost of all factors
TFC
cost of fixed factors
TVC
cost of variable factors
in a market in which the smallest output at which long-run average cost reaches its lowest level is large relative to market demand, the market is____
either an oligopoly or a monopoly
At the competitive equilibrium, marginal social cost____ marginal social benefit
equals
The social cost of monopoly can ____ the deadweight loss because of rent seeking
exceed
a brand name provides an___ to the producer to achieve ____ and ___ quality
high; consistent
the short run market supply curve is_____ at the shutdown point
horizontal
To increase output in the short run, a firm must___
increase the quantity of a variable factor
If marginal cost exceeds ATC and output increases, ATC ____ and AVC____
increases; increases
Product differentiation___
is making a product that is a close substitute but not a perfect substitute for the products of other firms.
A firm's supply curve____
is the same as the marginal cost curve at all points above minimum average variable cost
When a firm is producing a given output at least possible cost,____
it is operating on its long-run average cost curve.
A monopoly faces a market constraint because to sell a ___ quantity, it must set____
larger; lower
When some firms exit a market in which firms incur economic losses, the market supply curve shifts ______, the market price ______, and each remaining firm's economic loss ______.
leftward; rises; decreases
when price is lowered to sell one more unit, the lower price results in a revenue____ and the increased quantity sold results in a revenue ____
loss; gain
A competitive market is in long-run equilibrium. Some firms in the market adopt new technology that reduces the average total cost of producing the good. In the long run, the price is _______, firms with the new technology make _______ economic profits, and firms with the old technology _______.
lower; zero; switch to the new technology or exit the market.
at the long run competitive equilibrium, firms produce at the ____possible long run average cost
lowest
In a market undergoing technological change, firms that adopt the new technology _______. Firms that stick with the old technology _______.
make an economic profit and there is entry by new technology firms; either exit the market or switch to the new technology
The market for strawberries is in long-run equilibrium. Then a medical paper explains the health benefits of strawberries, which increases the demand for strawberries. As a result, firms will ______. Some firms will ______ the market, and the market supply curve will shift ______.
make normal profit; enter; rightward
Under an average cost pricing rule, the firm___
makes normal profit
if firms in a competitive market are___, then there is___ for firms to___ the market
making a positive economic profit; an incentive; exit
The market for pizza is perfectly competitive and has 1,000 firms. Each firm is identical. In long-run equilibrium, each firm is _______.
making normal profit
a monopoly can price discriminate among groups of buyers if___ across the two groups
marginal benefit differs
An example of a highly competitive market is the market for____
pizza
In perfect competition, a firm maximizes its economic profit if it produces the output at which____
price equals marginal cost
Perfect competition achieves efficiency if___
price equals marginal social benefit for consumers and price equals marginal social cost for producers
according to capture theory, regulation serves the self-interest of the ____
producer
Each firm takes the market price as given and produces its ______ output
profit maximizing
A brand name provides information about the ___ of a product to consumers
quality
As total variable cost increases, total fixed cost___
remains the same
when marginal product exceeds average product, average product is ____
rising
an increase in the wage rate that a firm pays its workers____
shifts both its MC curve and its ATC curve upward
if TFC increase, then the ATC curve___ and the MC curve___
shifts upward; does not shift
A brand name is a____
signal
Advertising is a___ to the consumer of a ___ quality product.
signal; high
A firm's minimum efficient scale is the ___ quantity of output at which long run average cost reaches its ___ level
smallest; lowest
if advertising is a signal, it doesn't need any___ product information
specific
the past expenditure on a plant has no resale value is called a ___
sunk cost
When a perfectly competitive industry is taken over by a single firm, the competitive industry's___ curve becomes the monopoly's___ curve
supply ; marginal cost
Market demand and supply determine____
the market price and output
Total product is__
the maximum output that a given quantity of labor can produce
Along the short run market supply curve,____
the number of firms remains constant
The short run is the time frame in which____ and the long run is the period of time in which____
the quantities of SOME factors are FIXED; The quantities of ALL factors are VARIED
A perfect price discriminating monopoly produces____
the same quantity of output as a perfectly competitive market.
The only costs that influence a firm's current decisions are
the short run cost of changing its labor inputs and the long run cost of changing its plant
in the short run, the equilibrium market price and the market output are determined by___
the short run market supply and demand
The market supply curve is _____ sloping at prices above the shutdown price
upward
The ATC curve eventually slopes ___ because AVC eventually ____
upward; increases
Rent seeking is the pursuit of___ by capturing economic____
wealth; rent
MC=
Change in TC/ change in Q
if diseconomies of scale are present and the firm ( ) all its inputs, its output ( )
Doubles; Less than doubles
AVC=
TVC/Q
Most production processes experience ( ) marginal returns initially, but all production processes eventually reach a point of ( ) marginal returns
Increasing; decreasing
Output
Q
When new firms enter a perfectly competitive market in which firms are making an economic profit, the market supply curve shifts _______, the market price _______, and each firm's output _______.
Rightward; falls; decreases
When your marginal grade exceeds you GPA, your GPA____
Rises
The vertical distance between the TC curve and the TVC curve is the___
TFC
TC=
TFC + TVC
AFC=
TFC/Q
TC/Q=
TFC/Q + TVC/Q
A monopoly that can perfectly price discriminate has a marginal revenue curve that is ______ the demand curve for the good that the monopoly produces. If a monopoly can perfectly price discriminate, it produces ______ deadweight loss and is ______ efficient than a single-price monopoly.
The same as; no; more
The law of diminishing returns says that as the firm uses more of ______, with a given quantity of ______, _______ product of the variable factor eventually diminishes.
a variable factor of production; the fixed factor of production; marginal
Consumers get the most value out of their resources at____ and producers get the most value out of their resources at ____
all points on the market demand curve; all points on the market supply curve
with competitive rent seeking, a single price monopoly's_____
deadweight loss increases
Monopoly creates a_____ and is ____
deadweight loss; inefficient
The production function for a water bottling firm tells us that 2 workers working with 1 bottling machine can produce 10 bottles of water in an hour, and 2 workers working with 2 bottling machines can produce 16 bottles of water. When the firm increases the number of bottling machines from 1 to 2 and keeps the quantity of labor at 2 workers, it experiences_____
diminishing marginal product of capital
The production function exhibits eventual____ marginal product of labor and eventual____ marginal product of capital
diminishing; diminishing
When the firm can lower its average total cost by decreasing its plant, then it is operating at a point on its long-run average cost curve with _______.
diseconomies of scale
If the monopoly produces a quantity at which marginal revenue exceeds marginal cost, _____
economic profit increases if output increases
If in the short run, firms in monopolistic competition make ______ profit, then in the long run, new firms will enter the market. The ______ the good produced by each individual firm will ______. In the new long-run equilibrium, firms will make ______ profit.
economic; supply of; decrease; positive economic
When the firm can lower its average total cost by increasing its plant, then it is operating at a point on its long-run average cost curve with _______.
economies of scale
A natural monopoly regulated by marginal cost pricing rule is____
efficient and incurs an economic loss
according to social interest theory, the political and regulatory process allocates recourses___
efficiently
When economies of scale enable one firm to supply the entire market at the lowest possible cost, the_____
firm is a natural monopoly
Advertising expenditures are___ costs and the per unit cost__ as production increases
fixed; decreases
The U shape of the average total cost curve arises because of spreading total _______ cost over a larger output and eventually _______ returns.
fixed; diminishing
When a firm engages in discrimination between two types of buyers consumer surplus____, producer surplus___ and the firm sells a ____ quantity
increases; increases; greater
The market for portable CD players is in long-run equilibrium. Then the demand for portable CD players decreases. As a result, firms will ______. Some firms will ______ the market, and the market supply curve will shift ______.
incur an economic loss; exit; leftward
A profit maximizing monopoly never produces an output in the____ range of its___ curve
inelastic; demand
A signal is an action taken by an ___ person to send a message to ____ people
informed; uninformed
Sunk cost is ____ to a firm's ____ decisions
irrelevant; current
A price cap regulation_____
is a price ceiling
in perfect competition, each firm_____
is a price taker
The social cost of a monopoly___
is greater with rent seeking than it otherwise would be.
In a competitive market, the market demand curve measures___
marginal social benefit if the people who consume a good or service are the only ones who benefit from it
In a competitive market, the market supply curve measures____
marginal social cost if the firms that produce a good or a service bear all the costs of producing it.
at the competitive equilibrium, the sum of consumer surplus and producer surplus is____
maximized
The firm's production function is the relationship between the ____ and ____
maximum output attainable; the quantities of both labor and capital
A monopoly ___ produces an output in the inelastic range of the market demand because it could charge a ___ price, produce a___ quantity, and ____ its profit
never; higher; smaller; increase
in perfect competition, there are ____ on entry into a market
no restrictions
perfect competition arises if each firm is perceived to produce a good or service that has ____characteristics
no unique
total fix cost includes
normal profit
The smallest quantity of output at which long run average cost is at a minimum is a firm's____
minimum efficient scale