micro chapter 10, mirco chapter 11, micro chapter 12
A firm produces 10 units of a product with a market price of $5 and an average total cost of $3. What is the firm's economic profit? Multiple choice question. $20 $50 $30 $2
$20
Why might a monopolist accept a less-than-maximum per-unit profit? Multiple choice question. The maximum per-unit profit is not possible. Maximum per-unit profit is strongly tied to lower total profit. Maximum per-unit profit always maximizes per-unit cost as well. Additional sales more than compensate for the lower profit per unit.
Additional sales more than compensate for the lower profit per unit.
Select all that apply A purely competitive firm's average revenue curve is equal to or coincides with which of the following? Multiple select question. Demand curve Price Minimum average total cost curve Total revenue curve
Demand curve Price
After a company has determined that it should produce a product and the amount of the product to produce, what basic question should it ask? Multiple choice question. What economic profit (or loss) will we realize? Which sales promotions should we offer? What level of output is provided by our closest competitor? How will our level of output affect market price?
What economic profit (or loss) will we realize?
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 cannot change the market price, it can only adjust to it can change the market price in the short run can change the market price in the long run
cannot change the market price, it can only adjust to it
A purely competitive firm's marginal revenue curve will ______ the firm's demand curve. Multiple choice question. not be parallel to the coincide with be perpendicular to be above
coincide with
The transformative effects of competition are often referred to as: Multiple choice question. creative destruction creative threat innovation transformative innovation technological advance
creative destruction
Slashing prices is an example of an entry barrier created by a(n) _______
monopolist
If producing is preferable to shutting down, a profit-seeking monopolist will produce up to the output at which _______. Multiple choice question. P = ATC MR > MC P = MC MR = MC
MR = MC
Multiple Choice Question The demand curve intersects the natural monopolist's long-run average total cost curve at a point where long-run average total costs are still falling, due to ______. Multiple choice question. the minimum efficient scale diseconomies of scale limited capital economies of scale
economies of scale
A firm would not stop producing if the loss is less than its ______ costs. Multiple choice question. fixed variable marginal total
fixed
Patents, economies of scale, and resource ownership are all assumptions of the pure model. Listen to the complete question
monopoly
Select all that apply A wage increase would increase marginal costs and shift the supply curve: Multiple select question. to the left to the right upward downward
to the left upward
At which stage of production is marginal revenue most likely to exceed marginal cost? Multiple choice question. The late-middle stage The initial stage The end stage The early-middle stage
The initial stage
Select all that apply Competitive market economies generate ______. Multiple select question. allocative efficiency productive efficiency quality efficiency capital efficiency time efficiency
allocative efficiency productive efficiency
______ of essential property is a barrier to entry into an industry. Control Mergers Deterioration Sale
Control
Select all that apply A purely competitive firm's demand schedule is equal to which of the following? Multiple select question. average revenue total revenue quantity supplied marginal revenue
average revenue marginal revenue
A monopolist does not achieve productive efficiency because it produces a level of output that does not correspond to the minimum point of the _______________ ___________cost curve.
average total
How does a monopoly generally transfer income? Multiple choice question. From the owners of the monopoly to consumers From competitive firms to the owners of the monopoly From the owners of the monopoly to the government From consumers to the owners of the monopoly
From consumers to the owners of the monopoly
Select all that apply Which of the following are potential solutions to the economic losses incurred by a regulated monopoly caused by socially optimal pricing? Multiple select question. Public subsidies Production quotas Tariffs Price discrimination
Public subsidies Price discrimination
When a firm produces a specific output level at a higher cost than the necessary cost for that level of output, it is called ______. Multiple choice question. economies of scale simultaneous consumption X-inefficiency rent-seeking expenditures
X-inefficiency
If the objective of government is to achieve _______ efficiency, it should establish a legal price for the monopolist that is equal to its marginal cost.
allocative
In pure competition, a firm's average revenue will be _____ the product's price. Multiple choice question. equal to less than greater than
equal to
In the initial stages of production, where output is relatively low, marginal revenue will usually ______ marginal cost. Multiple choice question. be equal to be lower than eliminate exceed
exceed
Select all that apply A decreasing-cost industry is one in which firms experience ______ costs as their industry ______. (Check all that apply.) Multiple select question. lower; expands higher; contracts higher; expands lower; contracts
lower; expands higher; contract
A decreasing-cost industry is one in which firms experience ______ costs as their industry ______. (Check all that apply.) Multiple select question. lower; expands lower; contracts higher; expands higher; contracts
lower; expands higher; contracts
______ utilities are government owned or regulated.
public
Select all that apply Which of the following statements about product price are true? Multiple select question. All competitive producers as a group can influence product price with their supply plans. Individual firms can affect product price with their supply decisions. Product price is a given fact for all competitive producers as a group. Product price is a given fact for the individual firm.
All competitive producers as a group can influence product price with their supply plans. Product price is a given fact for the individual firm.
Select all that apply Which of the following occur only in the long-run? Multiple select question. Price changes in response to demand The entry and exit of firms The reduction of output to zero The expansion or contraction of plant capacity
The entry and exit of firms The expansion or contraction of plant capacity
In regard to its slope, a purely competitive firm's demand curve is perfectly (horizontal/vertical).
horizontal
In an increasing-cost industry, increases in resource prices and the minimum average total cost (ATC) are a result of ______. Multiple choice question. increases in product demand resulting in economic profits and industry expansion decreases in product demand resulting in economic losses and industry contraction increases in product supply resulting in economic losses and industry contraction decreases in product supply resulting in economic profit and industry expansion
increases in product demand resulting in economic profits and industry expansion
Firms with downward-sloping product demand curves are called price _______
makers
The monopolist seeks maximum __________ profit, not maximum unit profit. Listen to the complete question
total
Price makers are firms with: Multiple choice question. downward-sloping demand curves vertical demand curves horizontal demand curves upward-sloping demand curves
downward-sloping demand curves
A purely competitive firm is a price _______ (Enter one word).
taker
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
The market demand curve for a purely competitive industry: Multiple choice question. slopes downward is perfectly inelastic is perfectly elastic slopes upward
slopes downward
A purely competitive market leads to the efficient use of: Multiple choice question. money as a medium of exchange supply and demand society's unlimited resources society's scarce resources
society's scarce resources
Government creates barriers to entry.
legal
Marginal revenue is the change in ______ revenue associated with a single-unit change in output. Multiple choice question. total average hypothetical incremental
total
In pure competition, marginal revenue and _______ are equal.
price
What term is used to describe declining average total costs with added firm size? Multiple choice question. Barriers to entry Pure monopoly Diseconomies of scale Economies of scale
Economies of scale
True or false: A firm within pure competition will maximize its profit when total cost is maximized over total revenue. True false question.TrueFalse
False
True or false: A pure monopoly involves a very large number of firms producing a single unique product. True false question. True False
False
Select all that apply Which of the following are assumptions made in the model of pure monopoly? Multiple select question. The firm is a multi-price monopolist and charges different prices for all units of output. Patents, economies of scale, and resource ownership secure the firm's monopoly. The government regulates the firm. No unit of government regulates the firm. The firm is a single-price monopolist and charges the same price for all units of output.
Patents, economies of scale, and resource ownership secure the firm's monopoly. No unit of government regulates the firm. The firm is a single-price monopolist and charges the same price for all units of output.
What is the term used to refer to charging different prices to different buyers of a specific product? Multiple choice question. Price elasticity Price monopoly Price utility Price discrimination
Price discrimination
In which scenario will production result in an economic profit? Multiple choice question. Marginal cost is equal to average total cost. Total cost exceeds total revenue. Price is equal to marginal cost. Price exceeds average total cost.
Price exceeds average total cost.
In which scenario can a firm pay part, but not all, of its fixed costs and should therefore continue producing even though it is experiencing a loss? Multiple choice question. Price is less than average variable cost but exceeds average total cost. Price exceeds both average variable cost and average total cost. Price is less than both average variable cost and average total cost. Price exceeds average variable cost but is less than average total cost.
Price exceeds average variable cost but is less than average total cost.
Which of the following is a method of calculating economic profit in pure competition? Multiple choice question. Price minus average total cost plus quantity Price minus average variable cost multiplied by quantity Price minus average total cost multiplied by quantity Total revenue minus marginal cost divided by quantity
Price minus average total cost multiplied by quantity
Select all that apply Which of the following are entry barriers created by monopolists? Multiple select question. Price reductions Collaboration with government Imposition of tariffs and quotas Increased advertising
Price reductions Increased advertising
Which of the following improves as production increases? Multiple choice question. Opportunity cost Price-marginal cost relationship Fixed costs Price-marginal revenue relationship
Price-marginal cost relationship
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. Prices of variable inputs Availability of product substitutes Consumer preferences Technology
Prices of variable inputs Technology
Which of the following is a given fact to the individual competitive firm, but a basic determinant of quantity supplied for the entire competitive industry? Multiple choice question. Input prices Product price Marginal cost Marginal revenue
Product price
The supply schedule for a purely competitive firm confirms that there is a direct relationship between which two factors? Multiple choice question. Average total cost and total revenue Marginal cost and product price Product price and quantity supplied Average total cost and quantity demanded
Product price and quantity supplied
Select all that apply What are the effects of technology on the firm and its short-run supply curve? Multiple select question. Market price increases (shifts upward). Productivity increases. The short-run supply curve shifts downward (to the left). Marginal costs decrease.
Productivity increases. The short-run supply curve shifts downward (to the left). Marginal costs decrease.
In which type of market does profit-maximizing output occur at the level at which price is equal to marginal cost? Multiple choice question. Oligopoly Monopolistic competition Monopoly Pure competition
Pure competition
Which market structure has the fewest obstacles to entry or exit? Multiple choice question. Pure competition Oligopoly Monopoly Monopolistic competition
Pure competition
Which of the following exists when a single firm is the sole producer of a product for which there are no close substitutes? Multiple choice question. Price taker Pure monopoly Deregulated monopoly Oligopoly
Pure monopoly
Which of the following best explains why a purely competitive firm would not stop producing if the loss is less than its fixed costs? Multiple choice question. Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover AVC and some FC. At a certain level of output, fixed costs decline. Therefore, the firm will earn a profit by expanding its output. Pure competition involves high barriers to exit. Therefore, shutting down would cost the firm more than the losses it sustains while producing. When purely competitive firms suffer losses in the short run, the price will rise to the point of total cost in the long run.
Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover AVC and some FC.
Which of the following best explains why a purely competitive firm would not stop producing if the loss is less than its fixed costs? Multiple choice question. Pure competition involves high barriers to exit. Therefore, shutting down would cost the firm more than the losses it sustains while producing. At a certain level of output, fixed costs decline. Therefore, the firm will earn a profit by expanding its output. When purely competitive firms suffer losses in the short run, the price will rise to the point of total cost in the long run. Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover AVC and some FC.
Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover AVC and some FC.
______ create(s) legal barriers to entry. Multiple choice question. Firms Competitors The market Government
Government
Select all that apply Whether a purely competitive industry is a constant-cost industry or an increasing-cost industry, the final long-run equilibrium position of all competitive firms share which of the following characteristics? Multiple select question. In the long run, an equality occurs where price equals marginal revenue, which equals minimum average total cost. Price or marginal revenue will settle where it is equal to minimum average variable cost. In the long run, a multiple equality occurs where price equals marginal cost which equals the minimum average total cost. Price or marginal revenue will settle where it is equal to minimum average total cost.
In the long run, an equality occurs where price equals marginal revenue, which equals minimum average total cost. In the long run, a multiple equality occurs where price equals marginal cost which equals the minimum average total cost. Price or marginal revenue will settle where it is equal to minimum average total cost.
Select all that apply In an increasing-cost industry, which of the following occur when an increase in product demand results in economic profits and attracts new firms to the industry? Multiple select question. Resource demand decreases, resulting in a leftward shift in each firm's ATC. Market supply decreases, driving up prices. Increased resource demand drives up resource prices. Each firm's ATC curve shifts upward.
Increased resource demand drives up resource prices. Each firm's ATC curve shifts upward.
What is the firm's most likely response if price is exactly equal to minimum average variable cost? Multiple choice question. Decreasing production to reduce variable costs Indifference to producing or shutting down Allocating more resources to production Shutting down production entirely
Indifference to producing or shutting down
Which of the following describes consumer surplus? Multiple choice question. It is the difference between the maximum price that consumers are willing to pay for a product and the market price for that product. By replacing "consumers" in the sentence with "producers", this would define producer surplus. It is the difference between the minimum price that consumers are willing to pay for a product and the market price for that product. It is the difference between the maximum price that producers are willing to receive for a product and the market price for that product.
It is the difference between the maximum price that consumers are willing to pay for a product and the market price for that product.
What will happen to a firm that finds a way to lower production costs through better technology or improved organization? Multiple choice question. Its profits will increase. Its demand curve will shift left. It will fail to compete and will be forced out of the industry. It will experience economic losses.
Its profits will increase.
Which of the following does a decreasing-cost industry experience? Multiple choice question. Higher costs as industry output remains constant. Higher costs as industry output expands. Lower costs as industry output contracts. Lower costs as industry output expands.
Lower costs as industry output expands.
Select all that apply Which of the following features occur in a purely competitive market? Multiple select question. Many independently acting sellers Sales in both national and international markets. One seller dominating the market Major restrictions on where products can be sold
Many independently acting sellers Sales in both national and international markets.
Assume that there are 100 identical firms in an industry that produces a product with a market price of $10. Each firm has an average total cost of $2 and an equilibrium output of 10 units. What is the industry's economic profit? Multiple choice question. $8 $80,000 $80 $8,000
$8,000
n pure competition, if the first unit of output sold increases total revenue from $0 to $131, marginal revenue for that unit is $131. If the second unit sold increases total revenue from $131 to $262, marginal revenue is again $131. The third unit sold increases total revenue to $______ and marginal revenue is now $______. Multiple choice question. 131; 393 393; 262 393; 131 131; 131
393; 131
If a firm's loss-minimizing output is 10 units and its average total cost at that level of output is $25, it will suffer a loss of $____ given a price of $20.
50
Which of the following are scenarios in which a firm should continue to produce? Multiple select question. Marginal revenue is $0.25 and marginal cost is $0.20. Marginal revenue is $1.50 and marginal cost is $1.45. Marginal revenue is $3 and marginal cost is $3.50. Marginal revenue is $5 and marginal cost is $4.75.
Marginal revenue is $0.25 and marginal cost is $0.20. Marginal revenue is $1.50 and marginal cost is $1.45. Marginal revenue is $5 and marginal cost is $4.75.
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 only if which of the following is true? Multiple choice question. Market price exceeds minimum average total cost. Market price exceeds minimum average variable cost. Market price is less than minimum average variable cost. Market price is less than minimum average total cost.
Market price exceeds minimum average variable cost.
Select all that apply Which of the following does an increasing-cost industry experience? Multiple select question. A downward shifting average total cost (ATC) curve as the industry expands. An upward shifting average total cost (ATC) curve as the industry contracts. A downward shifting average total cost (ATC) curve as the industry contracts. An upward shifting average total cost (ATC) curve as the industry expands.
A downward shifting average total cost (ATC) curve as the industry contracts. An upward shifting average total cost (ATC) curve as the industry expands.
Which of the following market structures produces only a standardized product? Multiple choice question. An oligopoly A monopolistically competitive market A purely competitive market A pure monopoly
A purely competitive market
Which of the following is a characteristic of a monopolistically competitive market? Multiple choice question. A perfectly elastic demand curve A relatively large number of sellers producing differentiated products Firms not having any control over the selling price of goods High barriers to entry and exit
A relatively large number of sellers producing differentiated products
Which action would increase market price in a purely competitive market? Multiple choice question. An individual firm reducing its output Market demand declining A new firm entering the industry, increasing output All firms reducing output simultaneously
All firms reducing output simultaneously
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 only if which of the following is true? Multiple choice question. Market price is less than minimum average variable cost. Market price exceeds minimum average variable cost. Market price is less than minimum average total cost. Market price exceeds minimum average total cost.
Market price exceeds minimum average variable cost.
Select all that apply Which of the following are characteristics of public utilities? Multiple select question. Low barriers to entry Monopolies or near monopolies Government owned or regulated Government has little control over price
Monopolies or near monopolies Government owned or regulated
Which of the following are considered to be the four basic market structures? Multiple select question. Monopolistic competition Oligopoly Representative democracy Pure monopoly Pure competition
Monopolistic competition Oligopoly Pure monopoly Pure competition
Select all that apply Which of the following are conditions necessary for price discrimination? Multiple select question. No resale Advertising Market segregation Homogeneous market Monopoly power
No resale Market segregation Monopoly power
Which of the following best describes pure competition? Multiple choice question. 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 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 two 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.
Which of the following best summarizes why a firm in a purely competitive market will not increase its product price? Multiple choice question. Asking a price higher than the market price would be futile because consumers could substitute with identical products that are cheaper. Asking a price higher than the market price would shift the industry demand curve to the left. Asking a price lower than the market price would be futile because all other firms would lower their price. Asking a price higher than the market price would subject the firm to fines from the government.
Asking a price higher than the market price would be futile because consumers could substitute with identical products that are cheaper.
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 revenue is low, making marginal cost unusually high. At the very early stages of production, marginal product is high, 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.
At the very early stages of production, marginal product is low, making marginal cost unusually high.
When the marginal cost of an additional unit of output exceeds the marginal revenue, what should the firm do? Multiple choice question. Continue producing more units output Shut down Reduce its fixed plant size Not produce that additional unit of output
Not produce that additional unit of output
Which of the following best describes a pure monopoly? Multiple choice question. One firm selling a single unique product, with ease of entry into the industry and little control over price Many firms selling a single unique product, where entry of additional firms is blocked and there is considerable control over price One firm selling a single unique product, where entry of additional firms is blocked and there is considerable control over price One firm selling differentiated products or services and in which entry of additional firms is blocked
One firm selling a single unique product, where entry of additional firms is blocked and there is considerable control over price
Which of the following best explains why the long-run supply curve of a constant-cost industry is perfectly elastic? Multiple choice question. The entry and exit of firms changes industry output bringing the price back to its original level, where it is equal to the constant minimum AVC The entry and exit of firms changes industry output bringing the price back to its original level, where it is equal to the constant minimum ATC The entry and exit of firms changes industry output bringing the price back to its original level, where it is equal to the constant minimum TC The entry and exit of firms changes industry output bringing the price back to its original level, where it is equal to the constant minimum AFC
The entry and exit of firms changes industry output bringing the price back to its original level, where it is equal to the constant minimum ATC
Select all that apply If a firm is found guilty of achieving a monopoly through anticompetitive actions, then which of the following may occur? Multiple select question. The firm may be forced into filing for bankruptcy. The firm may be expressly prohibited from engaging in certain business activities. The firm may be broken into two or more competing firms. The firm may be required to testify before Congress.
The firm may be expressly prohibited from engaging in certain business activities. The firm may be broken into two or more competing firms.
Select all that apply Which of the following statements are true about allocative efficiency? Multiple select question. Producer surplus is maximized and consumer surplus is minimized. The goods and services produced are those that society most wants to consume. It is impossible to produce net gains for society by altering the mix of goods and services produced. The marginal cost and marginal benefit of producing each unit of output is equal.
The goods and services produced are those that society most wants to consume. It is impossible to produce net gains for society by altering the mix of goods and services produced. The marginal cost and marginal benefit of producing each unit of output is equal.
Which of the following describes the individual competitive firm's supply curve? Multiple choice question. The individual firm's supply curve has no effect on price, but a significant effect on demand. The individual firm's supply curve can only affect price when the firm's output is low. The individual firm's supply curve represents a negligible fraction of total supply and therefore cannot affect price. The individual firm's supply curve represents a significant fraction of total supply and therefore can affect price.
The individual firm's supply curve represents a negligible fraction of total supply and therefore cannot affect price.
What is the primary difference between the individual firm's supply curve and the industry supply curve? Multiple choice question. The individual supply curve has no effect on price, whereas the industry supply curve has an important bearing on price. The individual supply curve has an important bearing on price, whereas the industry supply curve has no effect on price. The individual firm's supply curve slopes downward, whereas the industry supply curve is perfectly vertical. The individual firm's supply curve is perfectly vertical, whereas the industry supply curve slopes downward.
The individual supply curve has no effect on price, whereas the industry supply curve has an important bearing on price.
Which of the following best describes the economic break-even point? Multiple choice question. The point where total revenue covers fixed costs but not variable costs. The point where total revenue covers all costs, but there is no economic profit. The point where total revenue exceeds total costs and economic profits are realized. The point where total revenues exceed those of the strongest competitor in the industry.
The point where total revenue covers all costs, but there is no economic profit.
Which of the following best describes marginal revenue? Multiple choice question. The cost that an additional unit of output contributes to total cost. The sum of revenue received by producing at a certain level of output. The level of output needed to produce revenue that covers all of the firm's costs. The revenue that an additional unit of output contributes to total revenue.
The revenue that an additional unit of output contributes to total revenue.
Which of the following best describes marginal revenue? Multiple choice question. The revenue that an additional unit of output contributes to total revenue. The sum of revenue received by producing at a certain level of output. The cost that an additional unit of output contributes to total cost. The level of output needed to produce revenue that covers all of the firm's costs.
The revenue that an additional unit of output contributes to total revenue.
Select all that apply Which of the following are true about the profit-maximizing rule of MR = MC? Multiple select question. In some cases, MR will equal MC at a fractional level of output and therefore the last complete unit of output should be produced where MR < MC. The rule is an accurate guide to profit maximization for all firms regardless of their market structure. The rule applies only if producing is preferable to shutting down. The rule can be restated as P = MC when applied to a purely competitive firm because product price and MR are equal.
The rule is an accurate guide to profit maximization for all firms regardless of their market structure. The rule applies only if producing is preferable to shutting down. The rule can be restated as P = MC when applied to a purely competitive firm because product price and MR are equal.
Which of the following indicates the profit-maximizing level of output? Multiple choice question. The highest point on the total revenue curve The points at which total revenue and total cost intersect The lowest point on the total cost curve The vertical distance between the total revenue and total cost curves
The vertical distance between the total revenue and total cost curves
As firms exit the industry in the long run, market price rises and the losses for the remaining firms begin to subside. Firms will continue to exit until which of the following happens? Multiple choice question. Economic losses increase. There are no economic losses. Price falls to zero. There is an economic profit.
There are no economic losses.
Which statement about obstacles to selling in a purely competitive market is true? Multiple choice question. There are many legal obstacles to selling. There are many financial obstacles to selling. There are many technological obstacles to selling. There are no significant obstacles to selling.
There are no significant obstacles to selling.
True or false: Firms within pure competition will produce standardized products. True false question. True False
True
When will a firm earn an economic profit? Multiple choice question. When price is greater than average total cost. When price is less than average total price. When price is equal to average total price. When price is equal to average variable price.
When price is greater than average total cost.
A basic feature of the purely competitive market is the presence of ______. Multiple choice question. a large number of sellers high barriers to entry differentiated products differentiated prices
a large number of sellers
An industry where expansion or contraction will not affect resource prices and production costs is known as a(n) ______. Multiple choice question. constant-cost industry decreasing-cost industry economies-of-scale industry increasing-cost industry
constant-cost industry
The difference between the maximum price a consumer is willing to pay for a product and the actual price that they do pay is known as _____. Multiple choice question. consumer surplus deadweight loss producer surplus economic surplus
consumer surplus
Creative _______ captures the idea that the creation of new products and new production methods erodes the market positions of firms committed to existing products and old ways of doing business.
destruction
Price __________, or charging different prices to different consumers, is widely practiced in the US economy.
discrimination
The practice of charging different prices to different buyers for a specific product is known as price ________
discrimination
Firms that operate in a purely competitive industry: Multiple choice question. do not differentiate their products make long-run profits never incur short-run profits differentiate their products
do not differentiate their products
________ profits in a competitive industry will attract new firms into the industry.
economic
Each purely competitive firm's demand curve is perfectly ______ at the equilibrium price.
elastic
In a perfectly competitive market, the demand curve for an individual firm is perfectly _________ at the market price.
elastic
In purely competitive industries, firms can freely: Multiple choice question. earn economic profits increase or decrease prices raise input costs enter and exit
enter and exit
in pure competition, a firm's product price is ______ marginal revenue. Multiple choice question. not equal to less than equal to greater than
equal to
True or false: Price discrimination is not practiced very often in the US economy. True false question. True False
false
An oligopoly has ___ sellers and must consider the decisions of its rivals in determining its own ___ and output. Multiple choice question. many; costs many; price few; price few; costs
few; price
Select all that apply There is no incentive for firms to enter or exit the industry in the long run when ______. Multiple select question. firms earn a normal profit price equals minimum average total cost MR = MC firms earn a loss
firms earn a normal profit price equals minimum average total cost MR = MC
Economists group industries into ______ distinct market structures.
four
Select all that apply Which of the following are conditions necessary to have pure competition? Multiple select question. free entry and exit barriers to entry very large number of firms or sellers standardized product price searchers
free entry and exit very large number of firms or sellers standardized
A firm should not produce a unit of output when the marginal cost is ________ (greater/lesser) than its marginal revenue.
greater
Whenever price is ______ average variable costs but is ______ average total costs, the firm can pay part, but not all, its fixed costs by producing. Multiple choice question. less than; greater than less than; equal to greater than; less than equal to; greater than
greater than; less than
A purely competitive firm's total revenue curve will Multiple choice question. have a constant slope because each extra unit of sales increases total revenue by a constant amount have a variable slope due to changes in each extra unit of sales that vary with different levels of sales slope downward and to the right because each extra unit of sales increases total revenue by a constant amount
have a constant slope because each extra unit of sales increases total revenue by a constant amount
X-inefficiency occurs when a firm operates at a cost that is ________ (higher/lower) than the lowest cost for a particular level of output.
higher
Higher resource prices will result in ______ total costs. Multiple choice question. higher marginal lower marginal higher average lower average
higher average
The shape of the long-run supply curve for a constant-cost industry can best be described as: Multiple choice question. horizontal downward-sloping vertical upward-sloping
horizontal
In pure competition the demand curve faced by an individual firm graphs as a(n) ______ line and the market demand in pure competition is graphed as a(n) ______ curve. Multiple choice question. downward sloping; upward sloping horizontal; downward sloping upward sloping; vertical vertical; horizontal
horizontal; downward sloping
The entry of new firms entering an increasing-cost industry increase resource prices particularly: Multiple choice question. in industries using specialized resources whose short-run supplies do not readily increase in response to increases in resource demand in industries using specialized resources whose long-run supplies do not readily decrease in response to increases in resource demand in industries using specialized resources whose long-run supplies do not readily increase in response to decreases in resource demand in industries using specialized resources whose long-run supplies do not readily increase in response to increases in resource demand
in industries using specialized resources whose long-run supplies do not readily increase in response to increases in resource demand
Productive efficiency requires that goods be produced ___. Multiple choice question. using the least amount of resources in the least amount of time only with nonscarce resources in the least costly way in the most costly way
in the least costly way
Productive efficiency requires that goods be produced ___. Multiple choice question. using the least amount of resources in the least costly way in the most costly way in the least amount of time only with nonscarce resources
in the least costly way
New firms entering an increasing-cost industry will usually ______________ (increase/decrease) resource prices.
increase
The quantity of a product supplied by a firm in pure competition should _____ as long as price rises. Multiple choice question. remain constant increase decrease
increase
Within pure competition, a supplier will ______ production as price rises, as long as marginal cost is less than marginal revenue. Multiple choice question. increase maintain the same level of decrease shut down
increase
Because of the law of diminishing returns, marginal costs ______ at a(n) ______ rate at higher levels of output. Multiple choice question. decrease; decreasing decrease; increasing increase; increasing increase; decreasing
increase; increasing
Because of the law of diminishing returns, marginal costs ______ at a(n) ______ rate at higher levels of output. Multiple choice question. decrease; decreasing increase; decreasing decrease; increasing increase; increasing
increase; increasing
A wage ______ would raise marginal cost and shift the supply curve _______. Multiple choice question. increase; upward decrease; upward decrease; downward increase; downward
increase; upward
An industry whose average total cost curve shifts upward as the industry expands and shifts downward as the industry contracts is known as a(n) ______ industry. Multiple choice question. increasing-cost sunk-cost constant-cost decreasing-cost
increasing-cost
As an example of price discrimination, airlines charge higher fares to business travelers whose demand for travel is ________ and offer lower, more restricted fares to vacationers and others with more _________ demand.
inelastic elastic
As an example of price discrimination, airlines charge higher fares to business travelers whose demand for travel is _________ and offer lower, more restricted fares to vacationers and others with more ____________ demand.
inelastic elastic
A purely competitive firm can maximize its economic profit (or minimize its loss) by adjusting only its output because it ______. Multiple choice question. has market power is a price maker has access to unlimited resources is a price taker
is a price taker
The entry and the exit of firms in an industry are considered to be _____-run adjustments.
long
Select all that apply Strategies attempted by firms for increasing their profits include: Multiple select question. lowering production costs through better technology. developing a new product that is popular with consumers. increasing product prices to increase revenues. lowering production costs through improved business organization.
lowering production costs through better technology. developing a new product that is popular with consumers. lowering production costs through improved business organization.
The change in total revenue that results from selling one more unit of output is called ______ revenue.
marginal
The portion of a firm's ________ cost curve lying above its average ________ cost curve is its short-run supply curve
marginal variable
A firm would not produce a unit of output where ______. Multiple choice question. marginal revenue exceeds marginal cost marginal cost exceeds marginal revenue marginal cost equals marginal revenue marginal cost exceeds average revenue
marginal cost exceeds marginal revenue
_______ revenue is the additional revenue that an additional unit of _______ would add to total revenue.
marginal output
A firm should produce any unit of output whose ______. Multiple choice question. price is less than marginal cost marginal revenue is greater than marginal cost total revenue is greater than marginal cost marginal cost is greater than marginal revenue
marginal revenue is greater than marginal cost
A purely competitive firm's profit is ______ when total revenue exceeds total cost by the maximum amount. Multiple choice question. minimized maximized normalized eliminated
maximized
The long run, every purely competitive firm tends to operate at its ______. Multiple choice question. minimum ATC maximum ATC minimum AFC minimum AVC
minimum ATC
In which market model do firms rely on product differentiation to distinguish themselves from the competition? Multiple choice question. monopolistic competition pure monopoly pure competition oligopoly
monopolistic competition
A(n) ______ is able to maintain an economic profit in the long run because there are no new entrants to increase supply, drive down price, and eliminate economic profit. Multiple choice question. perfectly competitive firm monopolistically competitive firm oligopolistic firm monopoly
monopoly
From an economic standpoint, the break-even point is the level of output at which a firm makes a(n) ______ profit. Multiple choice question. normal accounting economic negative
normal
In the long run, a purely competitive firm will only earn a ______ profit. Multiple choice question. economic negative zero normal constant
normal
Which of the following best describes oligopoly? Multiple choice question. Involves only a few sellers of a standardized or differentiated product, so each firm is unaffected by the decisions of its rivals. Involves only a few sellers of a standardized or differentiated product, so each firm is affected by the decisions of its rivals. Involves many sellers of a standardized or differentiated product, so each firm is affected by the decisions of its rivals. Involves only a few sellers of an identical product, so each firm is affected by the decisions of its rivals.
nvolves only a few sellers of a standardized or differentiated product, so each firm is affected by the decisions of its rivals.
In the short run, a purely competitive firm can maximize its economic profit (or minimize its loss) by adjusting its _______
output
A purely competitive firm's horizontal demand curve indicates ______. Multiple choice question. relative price inelasticity perfect price elasticity perfect price inelasticity relative price elasticity
perfect price elasticity
The strongest barriers to entry effectively block all ______. Multiple choice question. economies of scale marketing efforts monopolistic situations potential competition
potential competition
In a purely competitive market, marginal revenue is a constant that is equal to which of the following? Multiple choice question. quantity average total cost consumer surplus price
price
In pure competition, to calculate economic profit, we first calculate the difference between ________ and average total cost and then multiply it by output.
price
Market segregation must exist in order for a monopolist to ______. Multiple choice question. be a natural monopoly prevent entry of new firms price discriminate improve technologies
price discriminate
Baseball ticket sellers charge a different price for adults and children. Ballpark concession stands charge the same prices for products sold to any customer. The baseball ticket sellers are providing a successful example of Multiple choice question. marketing. price discrimination. the law of one price. near-monopoly.
price discrimination.
Select all that apply A regulated monopoly is likely to suffer losses when ______. Multiple select question. price is set to marginal cost (P = MC) it produces where marginal revenue equals marginal cost price is set to achieve the most efficient allocation of resources price is set to achieve productive efficiency
price is set to marginal cost (P = MC) price is set to achieve the most efficient allocation of resources
________ competition is considered to be rare in the real world.
pure
All firms in a(n) ______ industry share the same basic efficiency characteristics. Multiple choice question. monopoly oligopolistic monopolistically competitive purely competitive
purely competitive
A firm will not increase its product price in a(n) _________ competitive market because consumers can switch to a lower-priced identical product.
purley or pure
In a purely competitive market, price per unit to the purchaser is synonymous ________ with per unit or ______ revenue to a seller. (Enter one word per blank.) Listen to the complete question
revenue marginal
Select all that apply In a purely competitive industry, at the profit-maximizing or loss-minimizing level of output, marginal ______ is equal to ______. Multiple select question. revenue; marginal cost cost; price revenue; price output; marginal cost
revenue; marginal cost cost; price
A competitive firm may realize an economic profit or loss in the _______ run but will earn only a normal profit in the _________ run.
short long
Two solutions to the economic losses caused by socially optimal pricing are providing public _________ and condoning price discrimination.
subsidy
In a purely competitive industry, an increase in the price of the product produced by firm A will cause buyers to ______. Multiple choice question. leave the industry substitute with products of firms B, C, or D enter the industry substitute with products from a monopolistically competitive industry
substitute with products of firms B, C, or D
A pure monopoly exists when a single firm is the sole producer of a product for which there are no close ___. Multiple choice question. price takers complements patents substitutes
substitutes
The portion of a firm's marginal cost curve that lies above its average variable cost is the firm's short-run _________ curve.
supply
Select all that apply In purely competitive markets, efficiency can be temporarily disrupted and then restored by changes in: Multiple select question. technological changes. consumer tastes. resource supplies. consumer and producer surplus
technological changes. consumer tastes. resource supplies.
After all long-run adjustments are completed in a perfectly competitive market, output will occur at each firm's minimum average ______. Multiple choice question. variable cost where product price is equal to marginal revenue total cost where product price is equal to marginal revenue total cost where product price is less than marginal revenue total cost where product price is greater than marginal revenue
total cost where product price is equal to marginal revenue
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
What is the term for factors that prohibit firms from entering an industry? Multiple choice question. Reduction of entry Barriers to business Lack of entry Barriers to entry
Barriers to entry
Which of the following best summarizes why firms in purely competitive industries do not differentiate their products? Multiple choice question. Because there are so many of them selling a standardized product Because there are so many of them selling a non-standardized product Because there is not enough demand for differentiated products Because of scarce resources that limit the production of alternative products
Because there are so many of them selling a standardized product
True or false: Higher resource prices create lower ATC and cause an upward shift of the long-run ATC curve. True false question. True False
False
What will happen to a firm that finds a way to lower production costs through better technology or improved organization? Multiple choice question. Its demand curve will shift left. Its profits will increase. It will fail to compete and will be forced out of the industry. It will experience economic losses.
Its profits will increase.
Select all that apply Economic profit will fall to zero and firms will choose not to enter an industry when price is equal to which of the following factors? Multiple select question. Marginal cost Marginal utility Minimum average total cost
Marginal cost Minimum average total cost
If the objective of government is to achieve allocative efficiency, what kind of price should government establish for the monopolist? Multiple choice question. One that is equal to its marginal cost. One that is above its marginal cost. One that is fair to all consumers. One that is below its marginal cost.
One that is equal to its marginal cost.
Which of the following is considered a barrier to entry into an industry? Multiple choice question. Low start-up costs Ownership of essential property Standardized products "Price taker" status
Ownership of essential property
Which type of market produces the most efficient use of society's resources? Multiple choice question. Oligopoly Monopolistic competition Monopoly Pure competition
Pure competition
Which of the following explains why a firm would not produce a unit of output where MC exceeds MR? Multiple choice question. Producing it would add more to costs than to revenue, and profit would increase or loss would decrease Producing it would add more to revenue than to costs, and profit would decline or loss would increase Producing it would add more to costs than to revenue, and profit would decline or loss would increase Producing it would add more to revenue than to costs, and profit would increase or loss would decrease
Producing it would add more to costs than to revenue, and profit would decline or loss would increase
In purely competitive markets, an individual firm lacks control over which factor? Multiple choice question. Product price Whether it enters or exits the industry Individual output The location of its facilities
Product price
_____ (Allocative/Productive) efficiency means that goods are produced in the least costly way.
Productive
______ is relatively rare in the real world, although this market model is highly ______ to several industries. Multiple choice question. Pure monopoly; irrelevant Oligopoly; relevant Pure competition; relevant Monopolistic competition; relevant
Pure competition; relevant
Select all that apply Which factors illustrate that the demand curve for a purely competitive firm is perfectly elastic? Multiple select question. The firm cannot obtain a higher price by restricting its output. The firm has no legal or financial barriers for entering or exiting the industry. The firm does not need to lower its price to increase its sales volume. The firm produces only a small fraction of the total industry output.
The firm cannot obtain a higher price by restricting its output. The firm does not need to lower its price to increase its sales volume.
Which of the following explains why a pure monopolist is able to maintain an economic profit in the long run? Multiple choice question. There are no new entrants to decrease supply, drive up price, and eliminate profit. There are no new entrants to increase supply, drive down price, and eliminate profit. There are no new entrants to increase supply, drive up price, and eliminate profit. There are no new entrants to decrease supply, drive down price, and eliminate profit.
There are no new entrants to increase supply, drive down price, and eliminate profit.
Select all that apply Which of the following are true of purely competitive firms? Multiple select question. They are price takers. They do not exert control over product price. They produce a small fraction of total supply. They produce a large fraction of total supply.
They are price takers. They do not exert control over product price. They produce a small fraction of total supply.
Multiplying product price by output reveals which of the following? Multiple choice question. Marginal revenue Quantity demanded Total revenue Average total cost
Total revenue
Economies of scale refer to ______ average total costs with added firm size. Multiple choice question. constant marginal declining rising
declining
With a natural monopoly the demand curve intersects the long-run average total cost curve where the long-run average total cost curve is still _________
declining
A monopolist will never choose a price-quantity combination where price reductions cause: Multiple choice question. an increase in total revenue a decrease in total revenue marginal revenue to rise a decrease in marginal revenue
decrease in total revenue
A constant-cost industry is one where ______ will not affect resource prices and production costs. Multiple choice question. inflation or interest rates supply or demand expansion or contraction investment or capital
expansion or contraction
In pure competition the demand curve faced by an individual firm graphs as a(n) ______ line and the market demand in pure competition is graphed as a(n) ______ curve. Multiple choice question. horizontal; downward sloping downward sloping; upward sloping upward sloping; vertical vertical; horizontal
horizontal; downward sloping
A firm can be expressly prohibited from engaging in certain business activities or can be broken into two or more competing firms when it Multiple choice question. is getting too profitable. is found guilty of monopoly abuse. is not very competitive. is found innocent of antitrust.
is found guilty of monopoly abuse
Select all that apply A monopolist does not have a supply curve because: Multiple select question. it does not equate marginal revenue with marginal cost it does not produce at the minimum average total cost it does not equate price with marginal cost there is no single, unique price associated with each level of output
it does not equate price with marginal cost there is no single, unique price associated with each level of output
The change in total revenue associated with a one-unit change in output is called ________ revenue.
marginal
A(n) ______ competitive firm's average-revenue schedule is also known as its demand schedule.
purely
The price, multiplied by the firm's output or goods produced, equals ______. Multiple choice question. total profits total revenue average revenue marginal revenue
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; marginal cost marginal revenue; total cost total revenue; total cost
total revenue; total cost
The equation for determining economic profit or loss is ______ minus ______. Multiple choice question. marginal revenue; total cost total revenue; total cost total cost; marginal cost total revenue; marginal cost
total revenue; total cost
True or false: Efficiency within pure competition can be temporarily disrupted by a change in consumer tastes. True false question.TrueFalse
true
A purely competitive firm's total revenue (TR) is a straight line that slopes _______ (upward/downward) and to the _______ (left/right).
upward right
________ (one word) efficiency means that resources are distributed among firms and industries to yield a mix of goods and services that is most wanted by society.
allocative
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
The monopolist's level of output is not at the minimum point of ______, meaning it will not be productively efficient. Multiple choice question. marginal revenue average profit average variable cost average total cost
average total cost
The monopolist wants a price-quantity combination to fall in the _____ section of its demand curve, where a lower price means _____ total revenue. Multiple choice question. lower; greater elastic; greater unit-elastic; greater mid; greater inelastic; greater
elastic; greater
Economists maintain that new firms are attracted into an industry due to: Multiple choice question. economic profits total revenues normal profits accounting profits
economic profits
For purely competitive firms, the MR = MC rule can be restated so that ______ replaces marginal revenue. Multiple choice question. output total cost price average fixed cost
price
Since firms within pure competition are ________, all the firms in the industry must agree to change output in order to affect price. Multiple choice question. price makers price takers price searchers
price takers
Total revenue equals ______ times ______. Multiple choice question. demand; quantity price; quantity average revenue; price average revenue; demand
price; quantity
A competitive market generates _____ efficiency and ______ efficiency.
productive allocative
The market structure in which individual firms have the least amount of control over price is ______, whereas in ______ a single firm has significant control over price. Multiple choice question. pure monopoly; pure competition oligopoly; pure monopoly pure competition; monopolistic competition pure competition; pure monopoly
pure competition; pure monopoly
The market structures designated as "imperfect competition" are: Multiple choice question. pure monopoly; oligopoly; monopolistic competition pure competition; monopolistic competition; oligopoly pure monopoly; pure competition; oligopoly pure monopoly; pure competition; monopolistic competition
pure monopoly; oligopoly; monopolistic competition
A purely competitive firm will maximize its profits by producing up to the point where Multiple choice question. the vertical distance between the total revenue and total cost curves is the greatest. the horizontal distance between the total revenue and average variable cost curve is the greatest. the vertical distance between the total revenue and total cost curve is the least. the horizontal distance between the total revenue and average fixed cost curve is the greatest.
the vertical distance between the total revenue and total cost curves is the greatest.
The two ways to determine the level of output at which a firm will realize maximum profit or minimum loss are to compare total revenue to ______ and to compare marginal revenue to ______. Multiple choice question. maximum willingness to pay; equilibrium price average revenue; cost per unit marginal cost; total cost total cost; marginal cost
total cost; marginal cost
If price is below a firm's minimum average _______ cost, the firm will not operate.
variable
A firm should always stop producing if its average ______ cost is ______ price. Multiple choice question. total; greater than total; less than variable; less than variable; greater than
variable; greater than
At a price of $10 and a profit-maximizing (or loss-minimizing) level of output of 20 units, a perfectly competitive firm's average total cost is $15. This firm's economic profit or loss equals: Multiple choice question. -$100 -$50 $75 $5
-$100
Which of the following does the monopolist not have? Multiple choice question. A marginal revenue curve A demand curve A marginal cost curve A supply curve
A supply curve
Which of the following best explains why the price-marginal cost relationship improves as production increases? Multiple choice question. 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 high, making marginal cost unusually high. At the very early stages of production, marginal product is low, making marginal cost unusually high. At the very early stages of production, marginal revenue is low, making marginal cost unusually high.
At the very early stages of production, marginal product is low, making marginal cost unusually high.
Which of the following reasons explains why the purely competitive firm's demand curve is perfectly elastic? Multiple choice question. Because the individual firm is a price taker, the marginal cost curve coincides with the firm's equilibrium price. Because the individual firm is a price maker, the total revenue curve coincides with the firm's equilibrium price. Because the individual firm is a price taker, the marginal revenue curve coincides with the firm's equilibrium price. Because the individual firm is a price maker, the marginal revenue curve coincides with the firm's equilibrium price.
Because the individual firm is a price taker, the marginal revenue curve coincides with the firm's equilibrium price.
Select all that apply What are two ways that a purely competitive firm can determine the level of output at which it will realize maximum profit or minimum losses? Multiple select question. By comparing total revenue to total costs By comparing unit costs to total costs By comparing marginal revenue to marginal costs By comparing marginal costs to total costs
By comparing total revenue to total costs By comparing marginal revenue to marginal costs
Why will firms choose not to enter an industry when marginal revenue, marginal cost, price, and average total cost are equal? Multiple choice question. Existing firms are earning economic profits. Existing firms are earning only normal profits. Firms are losing money. Any increase in production will shift the demand curve left.
Existing firms are earning only normal profits.
What must be eliminated or avoided if the "invisible hand" is to produce socially optimal outcomes in purely competitive markets? Multiple choice question. Allocative efficiency Economic surplus Externalities Normal profits
Externalities
What must be eliminated or avoided if the "invisible hand" is to produce socially optimal outcomes in purely competitive markets? Multiple choice question. Economic surplus Externalities Normal profits Allocative efficiency
Externalities
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. True false question.TrueFalse
False
True or false: Because of the law of diminishing returns, marginal costs eventually fall as more units of output are produced. True false question. True False
False
True or false: Quantity supplied increases as price decreases, and economic profit is usually higher at lower product prices and output. True false question
False
If there are losses in the long run, what adjustments will take place? Multiple choice question. Firms will exit the industry until losses are eliminated. Firms will enter the industry until profits are earned. Firms will exit the industry until marginal cost is minimized. Firms will not make any adjustments and the market price will rise.
Firms will exit the industry until losses are eliminated.
in which type of market structure does a single firm produce a unique product with no close substitutes? Multiple choice question. Pure monopoly Oligopoly Pure competition Monopolistic competition
Pure monopoly
Select all that apply Select all the market structures that are considered forms of imperfect competition. Multiple select question. Pure monopoly Pure competition Oligopoly Monopolistic competition
Pure monopoly Oligopoly Monopolistic competition
Select all that apply What are the effects of the "invisible hand" in a purely competitive economy? Multiple select question. Resource allocation that maximizes consumer satisfaction A lack of incentive for innovation or product improvement Maximum profits for individual producers Inefficient depletion of scarce resources
Resource allocation that maximizes consumer satisfaction Maximum profits for individual producers
Select all that apply Confronted with the market price of its product, a purely competitive producer will ask which three questions? Multiple select question. Should we produce this product? If we produce this product, in what amount? If we produce this product, what price should we charge? If we sell above market price what will our profits be? What economic profit or loss will we realize if we produce this product?
Should we produce this product? If we produce this product, in what amount? What economic profit or loss will we realize if we produce this product?
Which of the following explains why technological progress reduces marginal cost? Multiple choice question. Technological progress increases the productivity of labor. Technological progress decreases the productivity of labor. Technological progress increases the need for additional variable inputs. Technological progress increases the need for labor.
Technological progress increases the productivity of labor.
How much will a profit-seeking monopolist produce if producing is preferable to shutting down? Multiple choice question. As much as possible, since more production means more revenue Up to the output at which marginal revenue exceeds marginal cost Up to the output at which marginal revenue is less than marginal cost Up to the output at which marginal revenue equals marginal cost
Up to the output at which marginal revenue equals marginal cost
The MR = MC rule can be applied to ______ firms; however, the rule can be restated as P = MC only when applied to ______ firms. Multiple choice question. all; purely competitive purely competitive; monopolistically competitive purely monopolistic; oligopolistic monopolistically competitive; purely monopolistic
all; purely competitive
Pure ______ involves a very large number of firms. Multiple choice question. monopoly competition oligopoly
competition
An unfavorable shift or ______ in demand will upset the original industry equilibrium and produce ______. Multiple choice question. increase; profits increase; losses decrease; profits decrease; losses
decrease; losses
If demand for the good decreases creating economic losses, firms will exit the industry in the long run. As firms exit in the long run, industry supply will ______ and market price will ______. Multiple choice question. decrease; rise increase; fall increase; rise decrease; fall
decrease; rise
The profit-maximizing rule of MR=MC states that in the short run, the firm will maximize profit or minimize loss by producing the output for which marginal revenue ______ marginal cost. Multiple choice question. is less than equals is greater than eliminates
equals
New firms entering an increasing-cost industry will usually ________ (increase/decrease) resource prices.
increase
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. small; a large share small; only a fraction large; a large share large; only a fraction
large; only a fraction
A purely competitive industry has a very ______ number of sellers, whereas the other three market structures reflect a progressively ______ or ______ number of sellers. Multiple choice question. small; larger; increasing large; smaller; decreasing large; smaller; increasing large; larger; increasing small; smaller; decreasing
large; smaller; decreasing
When a monopolist charges a higher price than a purely competitive firm would, the monopolist essentially ______. Multiple choice question. robs the government of tax income levies a "private tax" on consumers eliminates the need for simultaneous consumption mitigates the effects of income equality
levies a "private tax" on consumers
In a purely competitive industry, buyers view the products of firms B, C, D and E as ______ for the product of firm A. Multiple choice question. relative substitutes perfect substitutes perfect complements relative complements
perfect substitutes
A firm's total revenue is calculated as _______ times quantity produced. (Enter one word in the blank)
price
All firms in a(n) ______ industry share the same basic efficiency characteristics. Multiple choice question. monopolistically competitive oligopolistic monopoly purely competitive
purely competitive
