Microeconomics exam 2
Refer to Figure 22.3 for a perfectly competitive firm. This firm should shut down at any price below
$10
Refer to Table 21.5:
$30.
Refer to Table 21.5: The total cost of 3 units of output in Table 21.5 is
$30.
What is the average fixed cost when output is 100 units in Figure 21.2?
$96.00.
If the price of sandals increases by 10 percent and the quantity demanded falls by 20 percent, then the price elasticity of demand in absolute value is
2.
Refer to the data in Figure 22.1. A competitive firm will produce what level of units based on the data shown?
200 units.
What is the marginal cost of the 120th unit of output in Figure 21.2?
288.00
The shutdown point occurs where price is below the minimum of
AVC
The marginal physical product is the
Change in total output associated with one additional unit of input.
A firm that makes zero economic profits
Covers all its costs, including a provision for normal profit.
In the short run, when a firm produces zero output, total cost equals
Fixed costs
Which of the following is a factor of production for the Little Biscuit Bread Company?
Flour
Ceteris paribus, if income increases and as a result, the demand for good X increases and the demand for good Y falls,
Good X is a normal good and good Y is an inferior good.
When a producer can control the market price for the good it sells, the producer
Has market power.
Greater labor productivity means
Higher output per worker.
Elasticity of supply tells us
How much sellers will increase production in response to a change in price.
Price elasticity looks at
How much the quantity demanded or supplied changes after a change in price.
A competitive firm
Is a price taker.
Marginal cost
Is the change in total cost associated with a one-unit increase in production.
Profit
Is the difference between total revenue and total cost.
The perfectly competitive market structure includes all of the following except
Large advertising budgets.
The period in which there are no fixed costs is the
Long run.
Sam owns a taco restaurant, and he conducted a consumer survey that indicates that the price elasticity of demand for his restaurant is 3.5. You would advise Sam to
Lower his price to increase revenue.
Ceteris paribus, the law of diminishing returns states that beyond some point, the
Marginal physical product of a factor of production diminishes as more of it is employed with a given quantity of other inputs.
Refer to Figure 22.3 at quantity level B
Marginal revenue is greater than marginal cost, so the firm should expand production.
The most desirable rate of output for a firm is the output that
Maximizes total profit.
Which of the following products will have more inelastic demand?
Medicines.
The profit motive can encourage businesses to do all of the following except
Mistreat customers.
A firm experiencing economic losses will still continue to produce output in the short run as long as
Price is above average variable cost.
A firm's total revenue can be determined by
Price times quantity.
In the $80 to $40 price range in Figure 20.1, demand is
Price-inelastic.
Economists assume the principal motivation of producers is
Profit.
Price elasticity of demand shows how
Responsive the quantity demanded is to a change in price.
The period in which at least one input is fixed in quantity is the
Short run
The marginal physical product of labor in Figure 21.1 is negative for the
Sixth worker.
If demand is elastic, then
The elasticity number E is greater than 1.
When demand is inelastic
The percentage change in price is greater than the percentage change in quantity demanded.
Which of the following is most likely a fixed cost?
The rent for a factory.
Economies of scale are reductions in average
Total cost that result from using operations of larger size.
A firm maximizes profit when
Total revenue exceeds total cost by the greatest amount.
Which of the following industries is the best example of perfect competition?
Wholesale fresh flowers.