Econ Quizlet (homework 5)

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If it costs a firm ​$3,000 to produce 400 shirts and ​$6,500 to produce 900 ​shirts, then:

the firm is experiencing economies of scale

In a competitive​ market, if economic profits​ exist, then:

the market supply curve will shift rightward and the price will decrease.

The production function​ is:

the relationship between the quantity of inputs used and the quantity of outputs produced.

a firm with positive ___ profits might still choose to exit an​ industry, while a firm with positive ___ profits may not

-accounting -economics

For a​ firm, diseconomies of scale occur when the

ATC for the firm rises as the quantity produced increases

Hardware stores charge higher prices for snow shovels after a big snow storm. What role do prices play in the snow shovel​ market?

It would incentivize distributors to ship more snow shovels into the area to meet the increased demand.

The​ long-run supply curve is the portion of the MC​ curve:

above the ATC curve

A firm is producing goods in a market where the market price is less than the​ firm's average total cost but greater than its average variable cost. At this point the firm​ should:

continue to operate at a loss

A difficult problem for central planners is bringing together those economic agents whose interests coincide in order to trade. This is known as the​ ____________ problem.

coordination

A decreasing production pattern where successive increases in inputs lead to a decrease in marginal product is called the Law​ of:

diminishing returns

In a perfectly competitive​ market, a firm with multiple production plants will minimize total costs of production when

each plant produces where marginal revenue equals marginal cost.

In a perfectly competitive​ market, when firms enter and exit competitive​ markets:

it is a good sign the market is working.

Period of time when all of a​ firm's inputs can be varied.

long run

The change in total production associated with using one more unit of input.

marginal product

An outcome is Pareto efficient if

no individual can be made better off without making someone else worse off.

Which of the following equations measures price elasticity of​ supply?

percentage change in quantity supplied/percentage change in price

Machines and equipment that can be used for production.

physical capital

Producer surplus is the difference between the

price consumers pay and the supply curve

All firms in a perfectly competitive market are said to be​ __________.

price takers

Which of the following is true about how a firm in a competitive market decides what level of output to produce in order to maximize its​ profit?

produce until marginal revenue equals marginal cost

The process of transforming inputs into output.

production

The goal of a business in a perfectly competitive market is to​ maximize:

profits

Period of time when at least one of a​ firm's inputs is fixed.

short run

Social surplus is maximized when the​ ___________.

-buyers and sellers as distinct groups are doing as well as they possibly can -highest-value buyers are making a purchase and the lowest-cost sellers are selling -competitive market is in equilibrium

In a perfectly competitive​ market, a seller _____ choose to raise the price of its good since all the sellers in the market produce _____, so raising the price would result in ______

-cannot -identical goods -loosing all its customers

In a perfectly competitive​ market, an increase in market price shifts the marginal revenue​ (MR) curve ___,___ the quantity supplied

-up -increasing

A company pays each of its workers on a per diem basis. If another worker is​ hired, ____ costs will increase while ____ costs will remain the same

-variable -fixed

Which of the following is not one of the three conditions that characterizes a perfectly competitive​ market?

Firms have pricing power and can set their prices freely.

Assume that the market for chocolates is perfectly competitive. Which of the following statements would be true in this​ case?

Jill starts to produce chocolates​ today, but the addition of her supply into the market does not decrease the market price.

Increases in inputs eventually lead to less additional output.

Law of diminishing returns

Which of the following describes the​ long-run competitive market if demand were to​ increase?

Market price​ increases, economic profits​ increase, short-run market supply​ increases, long-run supply settles at minimum ATC

The market for economics textbooks is in equilibrium. The government decides to impose export restrictions on​ paper, leading to a decrease in the demand for paper. How does social surplus in the market for textbooks​ change? Why?

The social surplus increase​s, producer surplus may increase or​ decrease, and consumer surplus increases.

Which of the following equations calculates the profits of a​ firm?

Total revenues - Total costs

Assume there are two industries in our​ economy: the production of pizza and the production of calzones. Each of these products is produced in a similar way with similar ingredients and requires similar skills. If the market price of pizza in this competitive market is below the ATC curve and the price of calzones is above the ATC​ curve, ____________.

firms currently making pizza will switch to making calzones.

When comparing the accounting profit with economic​ profit, it must be true that the accounting profit is ______ economic profit

greater than or equal to

The difference between accounting profits and economic profits​ is:

implicit costs

Once planners have successfully brought economic agents​ together, a second problem of aligning the interests of the economic agents must be solved. This is known as the​ ___________ problem.

incentive

The price at which a seller is indifferent between making a sale and not doing so is known as his ​____________.

reservation price and willingness-to-sell value

The result of workers developing a certain skill set in order to increase total productivity.

specialization

Social surplus is the​ ____________.

sum of consumer surplus and producer surplus

Which of the following would maximize social​ surplus?

trade at the competitive market equilibrium.

The​ long-run average total cost curve is​ __________ and is found by using the​ ___________.

​U-shaped; minimum point across all possible ATC curves for a given quantity.


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