AP Micro 2018 Exam MCQ
above the average variable cost curve
A perfectly competitive firm's short-run supply curve is the portion of the marginal cost curve that is
Its marginal cost is $15.00, and its average variable cost is $12.50.
A profit-maximizing, perfectly competitive firm is currently in long-run equilibrium. It is earning $15,000 of total revenue from a sale of 1,000 units. Its total fixed cost of production is $2,500. Which of the following can correctly be inferred from the information provided?
a decrease in the price of the good
All of the following cause a rightward shift in the demand schedule for a normal good EXCEPT
The marginal revenue product curve will shift to the left.
Assume that barber shops operate in perfectly competitive product and factor markets. Which of the following will happen to working barbers if the price of haircuts decreases?
The quantity of corn will increase.
Assume that more corn is used to produce ethanol. Simultaneously, more effective control of pests and weeds occurs in farming. Which of the following will definitely occur in the corn market?
a decreasing long-run average total cost curve as a firm produces more output
Economies of scale can be illustrated by
there are interdependent firms
Game theory is most useful in describing outcomes in markets where
equals marginal factor (resource) cost, resulting in fewer workers being hired at a lower wage compared with a perfectly competitive labor market
In a monopsonistic labor market, a firm will continue to hire workers until the marginal revenue product of labor
MP of Labor MP of Capital Decrease Increase
Max Company produces electronic gadgets using labor and capital. If Max increases labor and decreases capital to produce the same quantity of gadgets, what will happen to the marginal product (MP) of labor and the MP of capital?
Dominant Strategy Nash Equilibrium\ ($27, $28) ($27, $28)
North Springs and South Springs are two firms that serve the local market for bottled water. Each firm must choose to either maintain or increase its current output. The first entry in each cell in the payoff matrix below shows the profits for North Springs, and the second entry in each cell shows the profits for South Springs. If the two firms do not cooperate, which of the following represents the payoff North Springs and South Springs receive in the dominant-strategy equilibrium and the Nash equilibrium?
Q1IKQ3
The diagram above depicts the demand and supply curves for good Y. The perfectly competitive market is initially in equilibrium, but the government decides to institute a price floor program by setting the price of good Y at PF and agrees to purchase all unsold units of good Y from the producers. The cost of this program to the government is represented by which of the following areas?
area P2 P3 JK
The following questions refer to the graph of a profit- maximizing firm below. The firm's economic profit is equal to
Price Quantity $4 7
The graphs above show Mary's demand for hamburgers and Mark's demand for hamburgers. Suppose Mary and Mark are the only two consumers in the market. Which of the following is a point on the market demand curve for hamburgers?
Having economies of scale in production over the range of market output
Which of the following can give a firm market power?
It produces where marginal cost equals marginal revenue, and the price is equal to average total cost.
Which of the following is true of a monopolistically competitive firm in long-run equilibrium?
