Econ 102 Final
The short run supply curve for the perfectly competitive firm is the portion of its
MC curve above the AVC curve
Another term for the total quantity of the output is
total product
if marginal product is negative then
total product is falling
For a hotdog vendor, the hotdog buns represents his
variable input
In a perfectly competitive firm at its long run competitive equilibrium point
P=AR=MR=LATC=SATC=MC
In the short run, the perfectly competitive firm will always earn an economic profit when
P>ATC
In economics, how long is the long run?
Whatever time it takes a firm to vary all inputs
Explicit cost
actual expenditures that a firm must make
Economic rent serves
an allocation function by guiding available supplies to the most efficient use
Managers in oligopoly firms must
anticipate the reaction of rival firms
The perfectly competitive firm's profit-maximizing rate of production occurs
at the point at which marginal revenue is equal to marginal cost
In a perfectly competitive market, positive economic profits act to
attract new entrants into industry
if the price of labor is constant and a firm experiences diminishing marginal product then its,
average variable cost increases
When total product is rising, a. fixed cost must be rising b. marginal product must be positive c. variable cost must be declining d. marginal product is negative
b
Which of the following is a characteristic of a monopoly market? a. many firms b. one firm c. easy entry d. firm is a price take
b
Which of the following would be a fixed input to an automobile firm? a. Steel b. A factory c. Car batteries d. Engineers
b
which of following is a characteristic of oligopoly a. easy entry and exist b. strategic dependence c. many firms d. none of the above
b
which of the following is always true of a perfectly competitive market a. MC=MR=AVC b. p=d=MR c.AVC=ATC=p d.p=d=AVC
b
which of the following is closest to a perfectly competitive market a. automobiles b.corn c.pizza d.breakfast cereal
b
which one of the following could be classified as an oligopoly a. retailing b. tobacco production c. farming d. fast food restaurants
b
For a perfect competitor, price equals
both average revenue and marginal revenue
All of the following are true regarding perfectly competitive price determination expect a. the market price is determined by the interactions among all buyers and firms b. the individual firm takes the market price as given c. the individual firm is known as a market price maker d. the individual firm's marginal revenue curve is horizontal at the market price
c
The firm's short run costs contain a. only variable costs b. only fixed costs c. both variable and fixed d. none of the above
c
Which of the following is correct? a. TC = TFC-TVC b. TC = TFC/TVC c. TC = TFC + TVC d. TC = TFC * TVC
c
Which of the following is not a characteristic of a perfectly competitive market? a. The products sold by the firms in the market are homogeneous b. There are many buyers and sellers in the market c. It is difficult for a firm to enter or leave the market d. Each firm is a price taker
c
which of the following is not a necessary condition of oligopoly a. strategic dependence b.barriers to entry c. differentiated products d. a small number of firms
c
which of the following is true a. monopoly results in a higher quantity of output being sod compared with perfect competition b. price discrimination occurs when there are differences in prices that reflect differences in marginal cost c.charging all customers the same price when costs vary can actually be a case of price discrimination d. price discrimination guarantees that the monopolists will make profit
c
Marginal cost equals
change in total cost/ change in output
the measurement of industry concentration which calculates the percentage of all sales contributed by a specific number of leading firms is called the
concentration ratio
In perfectly competitive market structure both buyers and sellers have equal access to information. This implies
consumers are able to find out about lower prices charged by other firms
Due to extremely large fixed costs, an electricity generating plant probably experiences which of the following returns to size? a. diseconomies of scale b. diminishing marginal product c. constant returns to scale d. economies of scale
d
Which of the following is always true at a firm's profit maximizing rate of product a.TR=TC b.MR>MC c.the total revenue curve lie below the total cost curve d. MR=MC
d
Which of the following would be a fixed input for amusement park? a.Ticket Takers b. Unpopped popcorn c. Concession workers d. roller coasters
d
Which of the following would not be considered a fixed cost of production? a. Insurance payments on plant and equipment b. the opportunity cost of capital c. Interest payments on a loan d. wages paid to labor
d
which of the following is not a feature of a monopolitically competitive market a. numerous buyers and sellers b. differentiated products c. freedom of entry and exist d. a homogeneous product
d
Suppose a perfectly competitive firm face the following short run cost and revenue conditions: ATC=$12, AVC=$10, MC=$15, MR=$13. The firm should
decrease output
the product sold by monopolitisically competitive firms are
differentiated
If a firm gets so large that management of employees and other resources becomes a costly problem, it will be experiencing
diseconomies of scale
Suppose a firm doubles its output in the long run. At the same time the unit cost of production remains unchanged. We can conclude that the firm is
facing constant returns to scale
Production function indicate the relationship between
factor inputs and the quantity of output
In the long run when a perfectly competitive firm experiences negative economic profit,
firm exist the industry, the market supply curve shifts leftward, and the market price rises
A basic distinction between the long run and the short run is that
in the short run, complete adjustment of all inputs is impossible, while in the long run all inputs can be adjusted
Suppose a perfectly competitive firm face the following short run cost and revenue conditions: ATC=$25.50, AVC=$20.50, MC=$25.50, MR=$28.50. The firm should
increase output
Clothing retailers have faced greater competition in recent years as more firms have entered the clothing market. Some of the competition has come from foreign competitors, but much of it is domestic competition. As a result there is much competition in markets for many types of clothing and
individual buyers and sellers cannot affect the market price because it is determined by the market forces of demand and supply
The difference between explicit costs and implicit costs
is that explicit costs involve resources that are purchased and implicit costs involve resources the firm already own
When a firm earns zero economic profits,
it has a positive accounting profit
The use of a tariff provides monopoly protection since
it reduces competition from imports by raising the import prices
There are 30 firms in an industry. what happens to that industry's four firm concentration ration when the third and fourth largest firms merge
it will increase
Suppose a family owned yogurt shop has $80,000 in total revenues, $36,000 in rent, and $20,000 in additional operating costs. The husband and wife work in the shop and pay no wages to themselves or others. The economic profits from the shop are
less than $24,000
Under perfectly competition, if a firm that sets its price slightly above the market price would
lose all its customers
In a monopolistically competitive market there are
many firms producing similar but not identical products
An oligopolistic market, each firm
must consider the reaction of rival firms when making a pricing and output decision
If in the short run total product is decreasing as more workers are hired, then the marginal product is
negative
Monopoly producers face
no competitive producers of the same product.
the concept of the production function implies that a firm using resources inefficiently will
obtain less output than the theoretical production function shows
strategic behavior and game theory are features of which market scheme
oligopoly
The demand curve for the product of a perfectly competitive firm is
perfectly elastic
In a monopolistically competitive market, the consumer receives the benefit of
product diversity
If a monopolist raises its price,
quantity demanded decreases
if a monopolist lowers its price
quantity demanded increases
An individual would willingly give a concert for $2000. IF she is paid $5000 for the concert, she is
receiving $3000 economic rent
For a perfectly competitive firm, any price below its minimum AVC is a
shutdown price
The less sensitive quantity demanded is to a change in price, the
smaller the absolute price elasticity of demand.
The law of diminishing marginal product states that
successive equal-sized increase in labor, when added to fixed factors of production, will result in smaller increases of output
Changes in production functions are associated with changes in
technology
Economists generally define the short run as being
that period of time in which at least one of the firm's inputs, usually plant size, is fixed.
If an industry's long run per unit cost decrease as its output increases then
the firm is most likely a decreasing cost industry
the typical shape of the long-run average cost curve is more like
the letter U
In economies, the planning horizon is defined as
the long run, during which all inputs are variable
the minimum possible short-run average costs are equal to long run average costs when
the long-run curve is at it's minimum point
Implicit costs are
the opportunity cost of using factors that a producer does not buy or hire but already owns
an oligopoly is a market situation in which
there are very few sellers and they recognize their strategic dependence on one another
Suppose that a firm is currently producing 1,000 units of output. At this level of output, AVC is $1 per unit, and TFC is $500. What is the firm's TC?
$1,500
Suppose that Justin Timberlake sells 10,000 tickets to a concert at $480 each. If the equilibrium price is $600 per ticket for a fixed supply of 10,000 tickets, what is the value of the additional economic rent that Timberlake could earn if he charged the market price?
$1.2 Million
When super stuff corporation produces 5,000 units, total costs equal $150,000 and total variable costs equal $75,000. At this level of output, what is super stuff average fixed cost?
$15
if the explicit cost to a firm to produce a unit of output are $6 and the firm sells 20,000 units f output for $9 per unit, the accounting profit received by the producer is
$600,000
Suppose that a firm is currently producing 500 units of output. At this level output, TVC = $1,000 and TFC= $2,500. What is the firms ATC?
$7
Jaycee Jeans sold 40 pairs of jeans at a price of $40. When it lowered its price to $20, the quantity sold increased to 60 pairs. Calculate the absolute value of the price elasticity of demand. Use the midpoint formula.
.6
Owners of a coffee shop finds that they can sell 150 donuts a day when the price of a donut is $1.20. When they price donuts at $1, they sell 170 donuts. The absolute value of the price elasticity of demand for donuts is
.69
At a price of $100, Beachside Canoe Rentals rented 11 canoes. When it increased its rental price to $125, 9 canoes were rented. Calculate the absolute value of the price elasticity of demand for canoe rentals using the midpoint formula.
.9
suppose that industry X has two firms with equal market shares, and industry Y has three firms with 65%, 30%, and 5% market share. The HHI of X is
150 lower than the HHI of Y
Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 65 cookies together. What is the marginal product of the 2nd worker?
20 cookies
suppose there are four firms in an industry. the market shares of the four firms are 5%, 20%, 35%, and 40%. the HHI for that industry is
3250
Suppose an industry has total sales of 25 million per year, the two largest firms have sales of 6 million each, the third largest firm has sales of 2 million each, and the fourth largest has sales of 1 million. the four firm concentration ratio of industry is
60%
Suppose an industry has total sales of 35 million per year, the largest firms have sales of 10 million each, the third largest firm has sales of 4 million each, and the fourth largest has sales of 2 million. the four firm concentration ratio of industry is
65.7%
Suppose an industry has total sales of 35 million per year, the largest firms have sales of 10 million each, the third largest firm has sales of 4 million each, and the fourth largest has sales of 2 million. The second largest firm has sales of
7 million
Suppose that an industry consists of 100 firms, the top 4 firms have annual sales of 1, 1.5, 2, 2.5 million. If the industry has annual sales of 8.5 million, the four firm concentration ratio is
82%
Suppose a perfectly competitive firm face the following short run cost and revenue conditions: ATC=$6.00, AVC=$4.00, MC=$3.50, MR=$3.50. The firm should
Shut down
Average total cost equals
TC/Q
Average Variable cost equals
TVC/Q
Mr. James' company producers candy bars. Which is not a variable input for this firm? a. Sugar b. Assembly line workers c. The machine d. Packing material
The machine
Which of the following is not a characteristic of a perfectly competitive industry a. economic profits must be positive in the short run b.the industry demand curve is downward sloping c. there is free entry and exist in the long run d. each firm produces the same homogeneous product
a
Which of the following is not one of the reasons a firm might be expected to experience economies of scale? a. depreciation b. specialization c. improved productive equipment d. the dimensional factor
a
which of the following is a short run decision for a firm? a. Firing workers b. downsizing the firm's manufacturing plant c. investing the new addition to the firms manufacturing plant d. expanding the firms distributing network of long haul trucks and smaller delivery trucks
a
which of the following is most likely to be sold in an oligopoly market a. cell phone service b. pizza c. electricity d. computer software
a
which of the following is not a characteristic of oligopoly firms a. perfect elastic demand curve b. few firms c. strategic dependence d. product differentiation
a
which of the following is true for the perfectly competitive firm a. Price and MR are always equal b. MR is less than price c. MR is more than price d. Price elasticity of demand is equal to 1
a
Being a price taker essentially means
a firm cannot influence the market price
When a firm uses technological improvements to increase output from the same amount of inputs the result is
a new production function
In oligopoly, any action by one firm to change price, output, or quality causes
a reaction by other firms
