eco test 3 hw

Which of the following is correct? A) MRP = MC x MR. B) MRP = MP x MR. C) MP = MRP x MR. D)MRP/ MC = TR.

b

Hiring labor up to the point that the extra revenue generated by the additional labor equals the extra cost is an application of the: A) marginal decision rule. B) marginal product rule. C) marginal revenue product rule. D) marginal factor cost rule.

a

(Exhibit: Profit Maximization in Monopolistic Competition) In Panel (a), if the firm raises its price above P, it will: A) lose all its customers. B) still have some customers. C) not lose any customers. D) have none of the above occur.

b

A firm will maximize profits in the hiring of labor if it hires where: A) MRP > MFC. B) MRP = MFC. C) MRP < MFC. D) MP x MR = MRP.

b

An obligation to make future payments is: A) an asset. B) a liability. C) wealth. D)interest.

b

If a firm is using a factor of production from a perfectly competitive market at a quantity of the factor where MFC = MRP, then profit: A) is maximized. B) can be increased by using less of the factor. C) can be increased by using more of the factor. D) can be increased by decreasing the factor price.

a

The amount by which an additional unit of a factor increases the firm's total revenue during a period is: A) marginal revenue product. B) average product. C) marginal factor cost. D)marginal physical product

a

Which of the following statements is true? A) MFC = change in total cost/ change in the quantity of a factor. B) MRPL= MPLx (P), where P is the price of labor. C) MFC = the change in the quantity of a factor times the change in the price of the factor. D) MRPL= MC of the output.

a

Your friend wants to borrow $2,000, pay it back in 1 year, and is someone who keeps his or her word. The friend agrees to repay you $2,080 in 1 year. The bank interest rate is 5 percent. Which of the following statements is(are) true? A) You will be financiallyworse off if you make the loan rather than deposit $2,000 in the bank. B) You will be financially better off if you make the loan rather than deposit $2,000 in the bank. C) The present value of $2,080 payable in one year with an interest rate of 5 percent is $1,904.76, which is less than the value of the $2,000 you have been asked to loan. D) A and C are true.

a

The two theoretical extremes of the market structure spectrum are occupied on one end by monopoly and on the other end by: A) duopoly. B) oligopoly. C) perfect competition. D) monopolistic competition.

c

Which of the following is (are) true? A) A monopoly firm is a price taker. B) MR > P if the demand curve is downward sloping. C) MR = MC is a profit-maximizing rule for any firm. D) All of the above are true.

c

Monopolistic competition is an industry characterized by: A) a product with no close substitutes. B) a horizontal demand curve. C) a small number of firms. D) relatively easy entry and exit.

d

. In perfect competition where P is the price of output: A) MRPL= MPLx P. B) MRPL/MPL= PL. C) MRP/P = MPK. D) MRPLx P = MPL.

a

A sunk-cost monopoly is most likely to result if a single firm: A) is the only seller in a small town or community. B) is investor owned, but granted the exclusive right by the government to operate in a market. C) experiences long-run increasing economies of scale over a wide range of output. D) has made extensive investments in advertising to establish brand-name recognition among consumers.

d

(Exhibit: Profit Maximization in Monopolistic Competition) A firm in monopolistic competition will maximize profits by producing the level of output where: A) P = MC B) MR = MC C) P = MR D) price minus ATC (i.e., economic profit per unit) is the largest.

b

A monopoly is likely to _______ and _______ than otherwise equivalent competitive firms. A) produce more; charge more B) produce less; charge more C) produce more; charge less D)produce less; charge less

b

An industry with a large number of relatively small firms producing differentiated products in a market with easy entry and exit firms is: A) monopoly. B) duopoly. C) oligopoly. D)monopolistic competition.

d

(Exhibit: Marginal Revenue Product and Demand) If the product price is $2 per unit and the price of the factor of production is $20 per unit, the profit-maximizing quantity of the factor is _______ units. A) 2 B) 4 C) 6 D) 8

c

(Exhibit: Marginal Revenue Product and Demand) Assume that the product price is $2 per unit, the price of the factor of production is $20 per unit, and 8 units are being hired. Profit can be maximized by hiring _______ unit(s). A) 1 more B) 2 more C) 1 fewer D) 2 fewer

d

(Exhibit: Marginal Revenue Product and Demand) Assume that the product price is $2 per unit, the price of the factor of production is $40 per unit, and 8 units are being hired. Profit can be maximized by hiring _______ unit(s). A) 1 more B) 2 more C) 1 fewer D) 3 fewer

d

(Exhibit: Marginal Revenue Product and Demand) If the product price is $2 per unit, the marginal revenue product for the third unit of the variable input is: A) $2. B) $10. C) $60. D) $80.

d

A monopoly can be temporary because of: A) high barriers to entry. B) privileges granted by the government. C) economies of scale. D) technological change.

d

(Exhibit: Profit Maximization in Monopolistic Competition) In Panel (b), the long-run equilibrium will result in: A) economic profits = 0. B) accounting profits = 0. C) a tangency of the ATC curve with the MR curve. D) A and C.

a

(Exhibit: Profit Maximization in Monopolistic Competition). When the demand curve for a firm in monopolistic competition shifts, the marginal revenue curve: A) must shift too. B) shifts in the opposite direction. C) will stay the same. D) will shift, but the profit-maximizing quantity will not change.

a

. Microsoft holds patents on Windows, but another source of its monopoly power identified in the book is: A) the network effects associated with the standards set by Windows. B) its willingness to use catalog sales as its primary form of retail sales. C) its exclusive franchise from the government. D) its restricted ownership of silica, the principle ingredient in manufacturing computer chips.

a

A firm increases its purchases of a factor of production in a perfectly competitive market from 10 units to 11 units. If the market price of the factor is $10 per unit, the marginal factor cost for the tenth unit is: A) $10. B) $20. C) $100. D) $110.

a

A firm that faces a downward-sloping demand curve is a: A) price setter. B) quantity minimizer. C) quantity taker. D) price taker.

a

(Exhibit: Marginal Revenue Product and Demand) Assume that the product price is $2 per unit, the price of the factor of production is $40 per unit, and 4 units are being hired. Profit can be maximized by hiring _______ unit(s). A) 1 more B) 2 more C) 1 fewer D)2 fewer

a

(Exhibit: Marginal Revenue Product and Demand) If the product price is $4 per unit and the price of the factor of production is $180 per unit, the profit-maximizing quantity of the factor is _______ unit(s). A) 0 B) 1 C) 3 D) 5

a

(Exhibit: Profit Maximization in Monopolistic Competition) In Panel (b), the profit-maximizing price is P2and the ATC curve is tangent to the new demand curve. The portion of the ATC that lies to the right of the tangency and continues down to the intersection of MC with ATC indicates _______ , because in the long run in _______ the price would be equal to _______. A) unused capacity; oligopoly; MC = minimum ATC B) excess capacity; perfect competition; MC = minimum ATC C) under-utilization; monopoly; MR = MC D) excess capacity; perfect competition; MC > minimum ATC

b

An industry with more than one firm and in which at least one firm is a price setter is: A) perfect competition. B) imperfect competition. C) monopoly. D) perfect monopolistic.

b

Assets are: A) obligations to make future payments. B) anything of value. C) a payment made to people who postpone the use of wealth. D) described by none of the above.

b

If you are paid $10,500 in one year on a $10,000 loan made today, then your interest rate is: A) 0%. B) 5%. C) $500. D) $10,000.

b

If you are the only seller of gasoline in a smaller town or community, your monopoly would result from: A) sunk costs. B) location. C) economies of scale. D) government restrictions.

b

The demand curve for a monopoly is: A) the sum of all the firm supply curves in the monopoly's industry. B) the industry demand curve. C) horizontal because no one can enter. D)perfectly elastic.

b

The profit-maximizing rule MC = P is followed by firms under: A) monopolistic competition, but not perfect competition. B) perfect competition, but not monopolistic competition. C) both monopolistic competition and perfect competition. D) either monopolistic competition or perfect competition, depending on the costs of production.

b

(Exhibit: Marginal Revenue Product and Demand) If the product price is $2 per unit and the price of the factor of production is $60 per unit, the profit-maximizing quantity of the factor is _______ units. A) 0 B) 2 C) 4 D) 6

c

(Exhibit: Marginal Revenue Product and Demand) If the product price is $2 per unit, the marginal revenue product for the fifth unit of the variable input is: A) $0. B) $20. C) $40. D) $60.

c

(Exhibit: Profit Maximization in Monopolistic Competition) In determining the price in monopolistic competition: A) the price to the firm is given by supply and demand for the industry. B) the firm is a price taker. C) the firm applies the marginal decision rule. D) A and B are true.

c

(Exhibit: Profit Maximization in Monopolistic Competition) In the short run, a firm in monopolistic competition may experience economic profits as shown in Panel (a) as the distance: A) PS. B) PS times the quantity 0M. C) PS times the quantity Q. D) PT times the quantity Q.

c

. (Exhibit: Profit Maximization in Monopolistic Competition) In Panel (a), the profit-maximizing price and quantity are _______ and _______ . A) S; M B) P; M C) P; Q D) T; Q

c

A firm's demand curve for labor is: A) the upward-sloping portion of its marginal revenue product curve. B) the downward-sloping portion of its marginal product curve. C) the downward-sloping portion of its marginal revenue product curve. D)horizontal for the firm in perfect competition

c

A natural monopoly exists whenever a single firm: A) is owned and operated by the federal or local government. B) is investor owned but granted the exclusive right by the government to operate in a market. C) confronts economies of scale over the entire range of production that is relevant to its market. D) has gained control over a strategic input of an important production process.

c

An expenditure that has already been made and cannot be recovered is called a _______ cost. A) nonretrievable B) floating C) sunk D) diseconomy of scale

c

Exhibit: Marginal Revenue Product and Demand) If the product price is $4 per unit and the price of the factor of production is $80 per unit, the profit-maximizing quantity of the factor is _______ unit(s). A) 1 B) 3 C) 5 D) 7

c

If your farm has the only known source of a rare cocoa bean needed to make chocolate-covered peanuts, your monopoly would result from: A) sunk costs. B) location. C) restricted ownership of inputs. D) government restrictions.

c

Suppose that you build a high-speed, magnetically powered transportation system from New York to Los Angeles. High fixed costs resulting from the enormous quantity of capital used in this system enable decreasing average cost for any conceivable level of demand. Your monopoly would result from: A) sunk costs. B) location. C) economies of scale. D) government restrictions.

c

The demand curve for a firm under monopolistic competition is: A) U-shaped. B) upward sloping. C) downward sloping. D)vertical.

c