online mcc microecon test 3
To draw a firm's short-run supply curve, you need its ________ curve and it's ___________ price
marginal cost, shut down
The monopolist can use the marginal principle to decide the profit-maximizing quantity by determining where
marginal rev equals marginal cost
A key feature of a monopoly is that
marginal revenue is less than price.
To maximize profit, a monopolist picks the quantity at which ___________ equals ______________.
marginal revenue, marginal cost
For a monopolist, the firm-specific demand curve is the same as the _________ demand curve
market
Assume that the firms in a perfectly competitive market are earning normal profits and the demand for the product increases. In the short run, the
market price will rise, and economic profits will be earned.
Assume that the firms in a perfectly competitive market are earning normal profits and the demand for the product increases. In the long run, the
market price will rise, economic profits will be earned, and new firms will enter.
A marginal cost curve intersects the average cost curve at the _________ point of the average cost curve.
minimum
The market price for wheat is $7. If a farmer's marginal cost is $5, the farmer should produce _________ output
more
A possible reason for lower average long-run costs in a larger operation is that labor will be ________ specialized in the large operation which will __________ labor productivity, leading to ________ average cost.
more, increase, lower
The presence of indivisible inputs explains the _______ portion of a long-run average-cost curve, and the notion of replication explains the __________ portion of a long-run average-cost curve.
negatively sloped, horizontal
The long-run average-cost curve is ________ sloped for small quantities of output because there are economies of scale resulting from indivisible inputs and labor specialization. Over the horizontal portion of the cost curve, increases in inputs lead to ____________ increases in output, so the average cost doesn't change.
negatively, proportionate
A monopoly that cuts its price gains revenue from its __________ customers but loses revenue from its _____________ customers
new, previous
Airline Pricing. Consider an airline that initially has a single price of $200 for all consumers. At this price, it has 120 business travelers and 60 tourists. The airline's marginal cost is $50. The slope of the business demand curve is −$4 per traveler, and the slope of the tourist demand curve is minus−$2 per traveler. Does the single-price policy maximize the airline's profit? The airline should _____________ the price it charges business travelers and it should ___________ the price it charges tourists.
no, increase, decrease
The long-run supply curve shows the relationship between ___________ on the horizontal axis and __________ on the vertical axis
quantity supplied, price
The negatively sloped portion of the short-run marginal-cost curve is explained by __________ and the positively sloped portion of the short-run marginal-cost curve is explained by __________
INCREASING MARGINAL PRODUCTIVITY, DIMINISHING MARGINAL RETURNS
The short-run marginal-cost curve is shaped like the letter ______ and the short-run average-cost curve is shaped like the letter ______
J, U
The marginal cost of an additional baseball fan is zero, so the profit-maximizing condition simplifies to
MR=0
You want to determine the profit-maximizing quantity for a monopolist. You can ask the firm's accountant to draw the firm's revenue and costs curves, but each curve will cost you $1,000. From the following list, indicate which curves you will request: average total cost, average fixed cost, average variable cost, marginal cost, demand, marginal revenue.
Marginal revenue and marginal cost.
Which of the following is not true when the firm experiences diminishing marginal product?
The total product is decreasing.
If the world price is 13 cents per pound, what areas of the world supply sugar to the world market and the United States? Suppose the United States bans sugar imports. You predict that the new price of sugar in the U.S. will be at least
The Caribbean, Latin America, Australia, and South Africa. .24
The short-run market supply curve is
a curve showing the relationship between the market price and the quantity supplied in the short run.
To show the deadweight loss from monopoly, we compare the monopoly outcome to what would happen under
a perfectly competitive market
An example of a market which has perfect... oligopoly competition
air travel t-shirts
At the break-even price,
all of the above
Payoff for Casino Approval. In 1993, seven Native American Tribes in Michigan cut a deal with the state. In exchange for being granted a monopoly in Vegas-style casino gambling, the tribes agreed to pay the state and local governments a share of its profits. By 1998, the profit sharing totaled more than $183 million. Why did the tribes propose this deal?
all of the above
To prolong their monopoly power, the producers of branded drugs pay millions of dollars to
all of the above
Suppose a firm in a perfectly competitive market is earning normal profits and there is an increase in demand. In the short run, the firm earns
an economic profit as prices rise. In the long run, new firms will enter and prices will fall.
If the monopoly profits are large enough to offset the substantial research and development costs of a new product, a firm will develop the product and become a monopolist.
true
The short-run average cost of production could be the same for two different quantities.
true
To maximize profit, the firm chooses the quantity of output that generates the largest
vertical difference between the total revenue curve and the total cost curve.
To maximize profit, the firm chooses the quantity of output
where the marginal-revenue curve equals the marginal-cost curve.
There are scale economies in the production of electricity from _________ because electricity can be generated from turbines of different sizes.
wind
Operate or Shut Down? Referring to the figure at right, suppose the market price of shirts drops to $3.25. At this price, the marginal principle will be satisfied _________ on the marginal-cost curve. The price of $3.25 is __________ than AVC, so the firm will be better off _____________.
at point c, greater than, operating at a loss.
In an increasing-cost industry, the
average cost increases because firms in a larger industry pay higher input prices and use less productive inputs.
For the break-even price ___________ equals the price so the firm earns ___________ economic profit.
average total cost, 0
A firm that is losing money should continue to operate in the short run if the market price exceeds
average variable cost
As the total output of a constant-cost industry increases, the _________ cost doesn't change, so the long-run supply curve is _________
average, horizontal
The short-run marginal cost (MC) is
change in total cost/ change in output
In Pakistan, the market for phone service is perfectly _______ because a person can enter the market with a relatively small initial investment —only $310.
competitive
At the current level of output, the marginal cost of MP3 players is less than the average cost. If you increase output, the average cost will
decrease
A decrease in price _________ a perfectly competitive firm's marginal revenue, so it ____________ the quantity supplied. This is the law of ___________ in action.
decrease, decrease, supply
At the current output level, a farmer's marginal cost of producing sugar is $0.26. If the price of sugar is $0.21 per pound, the farmer should ________ production. If the price of sugar is $0.30 per pound, the farmer should _______
decrease, increase
Changes in the Break-Even Price. Consider a switchgrass farmer whose initial break-even price is $76 = $36 explicit cost + $40 opportunity cost for land. For each of the following changes, explain the effects on the farmer's production cost and break-even price. If the cost of fertilizer decreases, the break-even price will ____________. If the market price of alfalfa increasesincreases, the break-even price will ___________
decrease, increase
The break-even price for switchgrass varies with __________ and on average is ______ per ton.
fertility of the land, 76
Equilibrium and Break-Even Price. The equilibrium price in a perfectly competitive industry is sometimes below the break-even price, sometimes above it, and sometimes equal to it because the
firm is a price taker and the equilibrium price is determined in the competitive market.
Average ________ cost is fixed cost divided by the quantity produced. Average ____________ cost is variable cost divided by the quantity produced. Short-run average total cost is equal to ___________.
fixed, variable, AFC+AVC
________ cost is cost that does not vary with the quantity produced. _________ cost is cost that varies with the quantity produced. Short-run total cost is the total cost of production when __________ fixed.
fixed, variable, at least one input is
An increase in demand causes a large initial upward __________ in price, followed by a downward __________ to the new long-run equilibrium price.
jump, slide
An information good has a ________ first-copy cost, and a _________ marginal cost
large, small
For a monopolist, marginal revenue is ______ than price
less
The price of the hardback edition of a best-selling book is typically three times the price of the paperback edition because the eager consumers who buy hardbacks have __________ elastic demand for the book
less
The aspirin sold in airports is more expensive than aspirin sold in grocery stores because the demand for aspirin in airports is relatively ________
less elastic
When a firm is perfectly flexible in its choice of all inputs, the firm is operating in the _______ run
long
A firm's _________ -run total cost is the total cost of production when the firm is perfectly flexible in choosing its inputs, including its production facility. When a firm has ______ returns to scale, as a firm scales up its operation, costs increase proportionately with output, so long-run average cost is ___________.
long, constant, constant
If a restaurant has two groups of customers, seniors and nonseniors, the seniors will be offered a
lower price because they have a more elastic demand.
At a price of $21 per CD, the marginal revenue of a CD seller is $15. If the marginal cost of CDs is $11, the firm should ___________ its price to ______________ the quantity sold
lower, increase
A firm will shut down an unprofitable business if ___________ is less than __________.
total revenue, variable cost
A Bluffing Farmer:Is the farmer bluffing, or will the farm workers lose their jobs if they reject the proposed pay cut?
He's bluffing
Tickets and Merchandise. Consider a baseball team that has a ticket price of $35 and sells 25,000 tickets at this price. The slope of the demand curve is −$0.002. The typical fan purchases $25 worth of merchandise that costs the owner $6 to provide. The marginal revenue from ticket sales is __________. Including both ticket sales and merchandise, the marginal fan contributes an additional ___________ to the team's total rev.
-15, 4
If a monopolist wants to increase the quantity sold from 6 units to 7 units, it cuts the price from $15 to $13. The marginal revenue =
1
Consumer Compensation. Consider the chapter opener about campus beverage monopolies. Your job is to fully compensate each student for the cost associated with a soft-drink monopoly. Suppose Coca-Cola increased the price of soft drinks by $0.10 per can and each student consumed 1010 soft drinks before the monopoly was granted. a. Kate continues to buy 10 soft drinks at the higher price. What is the appropriate compensation?______ Elise buys only 4 soft drinks at the higher price. Her demand curve is linear. What is the appropriate compensation?_______
1.00, .70
Refer to the figure on the right. Suppose the output of a large aluminum firm drops from 2 million pounds to 0.5 million pounds per year. The long-run average cost of producing aluminum will go from
1.6 to 2.8
Patent for NoSmak. A potential new drug, NoSmak, cures lip-smacking with one dose, but research and development would cost $90 million. The monopoly profit (earned while a single firm produces the product) will be $5 million per year. After a patent expires, the original developer of the drug will have sufficient brand loyalty to earn $1 million per year for another 10 years. a. What is the shortest patent length required to induce a firm to develop the drug? _______ years. What is the shortest patent length required to induce a firm to develop the drug if we ignore the profit earned after the patent expires _____________ years
16, 18
Compute the Cost. Edward the entrepreneur takes 2 hours to cut a lawn and he cuts 500 lawns per year. He uses solar-powered equipment (truck and mower) that will last forever—and could be sold at any time for $20,000. Edward could earn $8 per hour as a pedicurist. The interest rate is 10 percent. a. Given his current output level, his marginal cost is ______ and his average cost is _______. Suppose he decides to reduce the number of lawns cut by half, to 250 per year. His new marginal cost is _______ and his new average cost is ________.
16, 20, 16, 24
Copper Price Elasticity of Supply. Suppose the price of copper increases from $2,000 to $2,400 per ton and the quantity supplied increases from 8 million tons to 12 million tons. Use the midpoint formula to compute the price elasticity of supply for copper
2.2
The average cost for providing off-street parking is $30 per space per day, and as a monopolist you could charge $40 per space per day for 200 spaces. The maximum amount that you are willing to pay for a monopoly is
2000
Suppose the following changes occur. a. Your opportunity cost for work time triples (you are the first worker hired), from $50 to $150. However, the cost per worker continues to be $50 per day. b. The interest rate on your $365,000 investment for your workshop falls from 10 to 5 percent. c. Labor productivity—the quantity produced by each workforce—doubles. The short-run average cost for 10 paddles is _______
25
A firm produces 20 units of output at a market price of $4, a marginal cost of $4, and an average cost of $2. The firm's economic profit is ______, and the firm ______ maximizing it's profit.
40, is
Compute the Costs. Consider a firm that has a fixed cost of $60. Complete the fixed cost (FC) column. Complete the total cost (TC) column. Complete the marginal cost (MC) column Complete the average fixed cost (AFC) column. Complete the average variable cost (AVC) column. Complete the average total cost (ATC) column.
60 for all of them, (just add them together),8 12 15 20, 60 30 20 15 12, 10 9 10 11.25 13, ( add avc and afc together to get atc)
Suppose a person quits a job earning $60,000 per year and starts a business with $120,000 withdrawn from a money-market account earning 15 percent per year. The implicit cost of the business is ________ for the entrepreneur's time plus __________ for the entrepreneur's funds
60,000, 18,000
A perfectly competitive industry has 75 identical firms. At a price of $6, the typical firm supplies 10 units of output, so the market quantity supplied is ________ units of output
750
Suppose a new super-sized wind turbine is developed. Fill in the blanks in the following table.
875,000 & .0219
Consider the arthritis drug example in your text. If the research and development costs are $18 million, Flexjoint will develop the drug if it gets a patent that lasts at least _______ years
9
At a price of $20 per CD, a firm sells 50 CDs. If the slope of the demand curve is −$0.20, marginal revenue for the 51st CD is $_______. The firm should cut the price to sell one more CD if the marginal cost is less than _________
9.80, 9.80
Paying to Keep a Generic Out. Suppose your firm produces a branded drug at an average cost of $5 per dose and a price of $8 per dose. You sell 1,100 doses per day. If a generic version of the drug were introduced, your daily sales would decrease to 800 doses. How much are you willing to pay each day to prevent the entry of the generic version?
900
Maximizing the Profit Margin? According to the marginal principle, the firm should choose the quantity of output at which price equals marginal cost. A tempting alternative is to maximize the firm's profit margin, defined as the difference between price and short-run average total cost. Using this approach, which of the following would best describe the firm's short-run supply curve? Assume the firm will shut down rather than operate at a loss.
A vertical line at the quantity that minimizes average cost for prices above minimum average cost.
__________ input is an input that cannot be scaled down to produce a smaller quantity of output.
An indivisible
Margarine Prices. Several years ago, people became concerned about the undesirable health effects of eating margarine. The demand for margarine dropped, decreasing its price. Some time later, the price of margarine started rising steadily, although demand hadn't been changing. After several months of price hikes, the price of margarine reached the price observed before demand decreased. According to a consumer watchdog organization, the rising price of margarine was evidence of a conspiracy on the part of margarine producers. Which of the following provides an alternative explanation for the rising price of margarine and its eventual return to the original price?
As firms exited a constant-cost industry, the equilibrium price increased.
Assume bagged ice is a constant-cost industry in long-run equilibrium. If a natural disaster occurs that knocks power out for several weeks, what happens?
Demand increases which increases price in the short run. New supply is shipped in from out of state which then lowers prices.
Which of the following statements regarding diseconomies of scale and diminishing returns is true?
Diseconomies of scale is caused by coordination problems and higher input costs.
Deregulation and the Cost of Trucking. Suppose the government initially limits the number of trucking firms that can haul freight. The market for truck freight is initially served by a single firm that produces 5 million ton miles of service per year, where 1 ton mile is the hauling of 1 ton of freight 1 mile. The newly elected governor has proposed that other firms be allowed to enter the market. At a public hearing on the issue of eliminating the entry restrictions, the manager of the existing firm issued a grim warning: "If you allow entry into the market, 4 or 5 firms will enter, and the unit cost of truck freight will at least triple. There are big economies of scale in trucking, so a single large firm is more cost-efficient than several small firms would be." What's your reaction to this statement?
Economies of scale are slight. Unit cost will rise, but not by much.
Soybeans versus Processor Chips. Why is the market for soybeans perfectly competitive, with thousands of soybean farmers, while the market for computer processor chips is dominated by a few large firms?
Entry into the chip industry requires a relatively large investment.
The National Park Service Monopoly. The National Park service grants a single firm the right to sell food and other goods in Yosemite National Park. a. What are the trade-offs associated with this policy? Who gains and who loses? Does your answer to part (a) depend on whether the monopoly is granted as a political favor or auctioned to the highest bidder?
Fewer goods will be sold at higher prices. The firm will gain, consumers will lose, and there will be a deadweight loss. Yes. With an auction, monopoly profits will go to the government.
Ending a Casino Monopoly. Consider a state that initially has a single casino for gambling. Suppose the state allows a second casino to enter the market. How would you expect the entry of the second casino to affect (a) the variety of games offered in the casinos and (b) the payout (winnings) per dollar spent?
Greater variety of games; increased payout per dollar spent.
As the total output of a decreasing-cost industry increases, the average cost of production __________ so the supply curve is _________.
decreases, negatively sloped
The deadweight loss from monopoly is shown graphically by the area between the
demand and supply curves from the equilibrium quantity to the quantity supplied.
The short-run supply curve is steeper than the long-run supply curve because of the principle of
diminishing marginal returns
The typical short-run average-cost curve is shaped like the letter U, while the typical long-run average-cost curve is shaped like the letter L because
diminishing marginal returns, long run
Over the positively sloped portion of the short-run average-cost curve, the effect of _______ dominates the effect of __________.
diminishing marginal returns; falling average fixed cost
Tax Cuts for Discounters? Consider the following statement from a member of a city council: "Several of the merchants in our city offer discounts to our senior citizens. These discounts obviously decrease the merchants' profits, so we should decrease the merchants' taxes to offset their losses on senior-citizen discounts." Do you agree or disagree?
disagree
A situation in which the long-run average cost of production increases as output increases is called ________ of scale.
diseconomies
In the long run, for some firms the long-run average-cost curve will be positively sloped for high output levels because of
diseconomies of scale
Economic Detective and the Case of Margarine Prices: In a constant-cost industry, when demand decreases the long-run equilibrium price
does not change
When marginal cost is less than average cost, an increase in output ________ average cost. When marginal cost exceeds average cost, an increase in output __________ average cost
down, up
Because _________ cost typically exceeds ________ cost, ______ profit typically exceeds ______ profit.
economic, accounting, accounting, economic
An increase in the price of coffee increased the quantity supplied as land was converted from growing _________ to growing coffee
tea
A firm's objective is to maximize its __________ profit, which equals its total revenue minus its _________ cost. A firm's cost is always lower than its ________ cost, so its ___________ profit is always higher than its _________ profit.
economic, economic, accounting, economic, accounting, economic
A situation in which the long-run average cost of production decreases as output increases is called ______ of scale. The output at which scale economies are exhausted is the __________ scale.
economies, minimum efficient
An increase in the price of shirts will cause firms to _________ the industry. Entry will continue until ________ equals ___________
enter, avg cost, price
The monopolist decision process involves a three-step process: 1. Finding the quantity at which marginal revenue __________ marginal cost. Using the curve to find the price associated with the monopolist's chosen quantity. Computing the ________ sold as the _________ and the ____ as the ________ times the number of units sold.
equals, demand, profit per unit, price minus avg total cost, total profit, profit per unit
A firm will operate so long as the price
exceeds average variable cost
A firm will operate so long as revenue
exceeds variable cost
A firm making zero economic profit stays in the market because total revenue is high enough to cover all the firm's costs, including the opportunity costs of the entrepreneur's
explicit and implicit costs.
economic cost equals ______ cost plus ________ cost
explicit, implicit
A monopoly is inefficient solely because the monopolist gets a profit at the expense of consumers.
false
The government only grants a patent for a product that would otherwise not be developed.
false
Economic profit equals __________ minus _________
total rev, econ cost
Same Average Cost with Different Quantities? Suppose there are two pencil producers with identical production facilitieslong dash—identical factories and equipment. The firms pay the same wages and pay the same prices for materials. Sam has a small workforce and produces 500 pencils per minute; Marian has a medium-size workforce and produces 1,000 pencils per minute. The two firms have the same average total cost of 15 cents per pencil. Suppose you build a production facility identical to the ones used by the other firms and hire enough workers and buy enough materials to produce 1,500 pencils per minute. You expect your average cost to be __________ 15 cents per pencil
greater than
A Better Whale Mold The cost of the first whale produced with the new mold is __________ the cost with the original mold At what quantity of whales will production with the new mold be less costly than production with the original mold?
greater than, 3
For information goods such as a music video distributed online, the cost of producing the first copy is very _________, but the marginal cost of reproduction is ___________
high, very low
If a restaurant has two groups of customers, seniors and nonseniors, the nonseniors will be offered a
higher price because they have a less elastic demand and the firm's profits will increase from sales to this group.
In a constant-cost industry, the long-run supply curve is
horizontal
For a perfectly competitive firm, the firm-specific demand curve is __________ and for a monopolist, the firm-specific demand curve is ________
horizontal, negatively sloped
A switch from perfect competition to monopoly __________ the price and ___________ the quantity sold. Consumer surplus __________ , while profit ________ . The net loss to society is the _________ loss from monopoly.
increase, decrease, decrease, increase, deadweight
As the total output of an increasing-cost industry increases, the average cost of production _____________ because input prices ___________ and the productivity of inputs used by firms __________
increase, increase, decrease
Consider a delivery firm that delivers packages by bicycle, charging $14 per package and paying each of its workers $13 per hour. One day, one of the workers was three hours late to work, and the number of packages delivered that day decreased by two packages. The tardiness of the worker _______________ Based on the new information provided by the tardy worker, the firm should produce fewer deliveries by reducing its workforce because the marginal cost is __________ the price
increased, greater than
As the quantity produced by a monopolist increases, the gap between the marginal revenue curve and demand curve
increases
The average cost of electricity __________ as the size of the wind turbine decreases.
increases
As the price of shipping services increases, the quantity supplied
increases as firms deploy less efficient ships and as each ship travels faster.
According to the principle of diminishing returns, as one input increases while the other inputs are held fixed, output
increases at a decreasing rate which causes the marginal product to fall as output increases.
Suppose the demand for shirts increases. In the short run, the price __________ by a relatively large amount. As firms enter the market, the price __________. In the new long-run equilibrium, there is a net __________ in price relative to the old equilibrium.
increases, decreases, increase
A patent increases the incentive to develop new products because it ___________ the price of the product and thus generates profit to cover a firm's costs of ______________.
increases, development
The cost of producing the first fake killer whale is about three times the cost of producing the second because the firm uses _______ inputs
indivisible
Your firm has a price of $3, an average total cost of $5, and an average variable cost of $2. In the short run, you should _________ because ___________ exceeds ______________. In the long run, you should __________ the market because ________ exceeds _____________.
operate, price, average variable cost, exit, average total cost, price
Your firm has a total revenue of $300, a total cost of $700, and a variable cost of $200. You should __________ because _________ exceeds ____________.
operate, total rev, variable cost
The computation of economic cost is based on the principle of
opportunity cost
A firm's implicit cost is defined as the _________ cost of nonpurchased inputs, such as the entrepreneur's ___________ and ___________
opportunity, time, personal funds
Negative Marginal Revenue. The manager of your firm is puzzled because the larger the quantity of output sold, the lower its total revenue. The manager gets weekly data in a table with two columns of numbers: Quantity Sold and Total Revenue. After you do some computations and add a third and a fourth column of numbers, the manager looks at the new table and says, "Aha, now I see why selling more decreases total revenue." The third column of numbers has data on ___________ and the fourth column has data on _____________ How do the additional columns of numbers explain the negative relationship between quantity sold and total revenue? _______
percentage change in quantity, percentage change in price, If the percentage decrease in price is greater than the percentage increase in quantity, total revenue will fall.
A reliable predictor of a consumer's willingness to pay for a movie is the consumption of
popcorn
The marginal-cost curve for producing crude oil is _______ sloped, reflecting variation in the cost of extracting oil from different sources.
positively
In an increasing-cost industry, the long-run supply curve is
positively sloped because the greater demand for inputs and labor increases the average cost of producing the product.
For a perfectly competitive firm, marginal revenue equals _____________ and to maximize profit, the firm produces the quantity of output at which ______ = _________
price, marginal cost, price
The firm-specific demand curve shows the relationship between the ________ charged by the firm and the __________ by the firm
price, quantity sold
Expand If Profit Margin Is Positive? Consider a firm that uses the following rule to decide how much output to produce: If the profit margin (price minus short-run average total cost) is positive, the firm will produce more output. Compared to a profit-maximizing firm, the firm will
produce more output and earn lower economic profit.
In some cases, a patent is socially beneficial because it
provides a valuable product that would not otherwise be developedprovides a valuable product that would not otherwise be developed.
A firm's short-run supply curve shows the relationship between _________________ on the horizontal axis and the ___________ on the vertical axis
quantity supplied, price
Suppose a firm starts with a single price and then switches to a price-discrimination scheme. The firm will ____________ he price for the group of consumers with the lessless elastic demand and ____________ the price for the group with the more elastic demand.
raise, lower
Whenever the marginal value is equal to the average value, the average value will
remain the same
Which of the following is not a policy the government uses to intervene in markets dominated by a single firm?
rent prohibition
The process of using public policy to gain economic profit is
rent seeking
The profit-sharing agreement between Michigan and the Native American tribes for casinos is an example of
rent seeking
Senior citizens pay less than everyone else for admission to a movie, but pay the same as everyone else for popcorn because popcorn is _________, but admission is not
resalable
Economic profit equals _________ minus __________
revenue, economic cost
Opportunity Cost and Entrepreneurship : The opportunity cost of driving for Uber or Lyft includes the
salary and fringe benefits from a regular job.
The _________ run is defined as a period over which a firm cannot change its production facility.
short
When the price of zinc dropped below $1,900, the price dropped below Alcoa's ______ price, so the company _________
shut down, closed mines
A constant-cost industry consumes a relatively _________ amount of inputs such as labor and materials, so as industry output increases the prices of these inputs ____________
small, do not change
Recent innovations in photovoltaic technology have reduced the unit cost of __________ power
solar
Land-use zoning that limits the amount of land for apartments generates a relatively __________ long-run supply curve for housing, so an increase in the demand for apartments leads to a relatively __________ increase in price
steep, large
Examples of increasing-cost industries include:
sugar and apartments.
A cost that a firm has already paid or committed to pay, so it cannot be recovered, is a _________ cost
sunk
A perfectly competitive firm is a price ________ while a monopolist is a price __________
taker, maker
Publishers charge more for hardback books because
the more casual readers are willing to wait for the lower-priced paperback.
Equilibrium in a market is where
the quantity of the product supplied equals the quantity demanded and the typical firm in the market maximizes its profit.
One can tell that the figure to the right shows short run costs because... (two squiggly lines going up from left to right)
total costs are positive when output is zero implying fixed costs.
Rules of Monopoly. In the board game Monopoly, when a player gets the third deed for a group of properties (for example, the third orange property), the player doubles the rent charged on each property in the group. Similarly, a player who has a single railroad charges a rent of $25, while a player who has all four railroads charges a rent of $200 for each railroad. a. Are these pricing rules consistent with the analysis of monopoly in this chapter? In the game, is there a deadweight loss from monopoly?
yes, no
The firm's short-run supply curve is the firm's
marginal-cost curve, above the minimum of the average variable cost.
A hurricane increases the demand for ice, shifting the demand curve to the right. In the short run, the supply curve is relatively
steep; in the long run, the supply curve is horizontal.
