econ ch 7
In economics, a firm that faces no competitors is referred to as _________________.
a monopoly
The graph above illustrates the total cost function for GoodieCookie Co. How are the company's fixed costs represented in this graph?
as the point where the total cost curve touches the vertical axis
In order to calculate marginal cost, the change in ______________ is divided by the amount of change in quantity.
either total cost or variable cost
The term "constant returns to scale" describes a situation where
expanding all inputs does not change the average cost of production.
Economies of scale may arise from all but one of the following. Which one is it?
government economic subsidies protect firms from competition to avoid losses.
The graph above illustrates the total cost function for GoodieCookie Co. The changing slope of the total cost curve reflects this company's
increasing marginal costs.
If the firm produces 5 units that it sells for $39.00 each, what will its profits or losses equal?
profits equal $40
In order to determine the average variable cost, the firm's variable costs are divided by _______________________.
the quantity of output
The graph above illustrates the electricity market. Consider market competition between firms where price is based on AR and select the most appropriate answer.
this market is imperfectly competitive with excess profits possible in the short-run
Whatever the firm's quantity of production, _____________ must exceed total costs if it is to earn a profit.
total revenue
If I'maJuiceCo. establishes a bottling plant in Delaware, it will most likely
use production technologies that conserve on the number of workers.
The term _____________ is used to describe the additional cost of producing one more unit.
marginal cost
Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?
physical space for the gallery
Approximately what percentage of the US labor force is employed by firms that have fewer than 100 employees?
35%
Mindy's company manufactures rubber balls used by elementary schools for playground activities. The table below sets out her firm's production cost information. Some values are missing. Which of the following statements is correct?
A = 20; E = 5
___________ include all spending on labor, machinery, tools, and supplies purchased from other firms.
Total costs
The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation.
average variable cost; fixed costs
A situation known as _____________________ occurs when all production inputs are allowed to expand, but that expansion does not result in much of a change in the average cost of production.
constant returns to scale
The ______________ of all firms can be broken down into some common underlying patterns.
cost structure
If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.
decreasing returns to scale
Refer to the graph shown above. Based on the information illustrated in the graph, which of the following is correct?
producing a marginal unit is increasing costs overall
________________________ arises where many firms are competing in a market to sell similar but differentiated products.
Monopolistic competition
The economies-of-scale curve is a long-run average cost curve, because
it allows all factors of production to change.
