Chapter 7

________________________ arises where many firms are competing in a market to sell similar but differentiated products. A. Oligopolistic competition B. Perfect competition C. Monopolistic competition D. Monogopolised competition

C. Monopolistic competition

___________ include all spending on labor, machinery, tools, and supplies purchased from other firms. A. Total profits B. Total revenues C. Total costs D. Total profit margins

C. Total costs

_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price. A. Total revenue B. Total profits C. Average profit margin D. Total cost

A. Total revenue

If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises. A. decreasing returns to scale B. consent returns to scale C. economies of scale D. increasing returns to scale

A. decreasing returns to scale

According to the definition of profit, if a profit-maximizing firm will always attempt to produce its desired level of output at the lowest possible cost, then it will A. do so regardless of what type of competition exists in a market. B. take a long-run perspective on costs, when such costs cannot be adjusted. C. take a short-run perspective on labor costs which cannot be immediately changed. D. breakdown its cost structure according to short-run adjustments.

A. do so regardless of what type of competition exists in a market.

The term "constant returns to scale" describes a situation where A. expanding all inputs does not change the average cost of production. B. a larger-scale firm can produce at a lower cost than a smaller-scale firm. C. expanding all inputs changes the average cost of production. D. the quantity of output rises and the average cost of production falls.

A. expanding all inputs does not change the average cost of production.

______________ include all of the costs of production that increase with the quantity produced. A. Fixed costs B. Variable costs C. Average costs D. Average variable costs

B. Variable costs

In microeconomics, the term _____________________ is synonymous with economies of scale. A. diminishing marginal returns B. increasing returns to scale C. decreasing returns to scale D. constant returns to scale

B. increasing returns to scale

Which of the following should typically be ignored because spending has already been made and cannot be changed? A. variable costs B. sunk costs C. marginal costs D. average marginal costs

B. sunk costs

In order to determine ____________, the firm's total costs must be divided by the quantity of its output. A. diminishing marginal returns B. fixed costs C. variable cost D. average cost

D. average cost