Econ test 2

(Figure: Profit Maximizing) The figure shows cost curves for a firm operating in a perfectly competitive market. Which of the following statements is true?

AFC is represented in this figure by the vertical distance between Curve N and Curve O at any level of output.

Figure: Profit Maximizing) The figure shows cost curves for a firm operating in a perfectly competitive market. N is the ________ curve.

ATC

Figure: Cost Curves) If a firm faced a long-run average total cost curve as shown in the figure, and it expected to produce 100 units of the good in the long run, the firm should build the plant associated with:

ATC2

(Figure: Profit Maximizing) The figure shows cost curves for a firm operating in a perfectly competitive market. O is the ________ curve.

AVC

Marginal cost ________ over the range of increasing marginal returns and ________ over the range of diminishing marginal returns.

Falls;increases

Table: Costs of Producing Bagels) Average total cost reaches its minimum value for the ________ bagel.

Fourth

The marginal cost curve intersects the average variable cost curve at:

Its lowest point

Figure: Profit Maximizing) The figure shows cost curves for a firm operating in a perfectly competitive market. M is the ________ curve.

MC

(Figure: Short-Run Costs) A is the ________ cost curve.

Marginal

Figure: Short-Run Costs II) Curve 1 is the ________ cost curve.

Marginal

The curve that shows the additional cost of each additional unit of output is called the:

Marginal cost curve

The slope of a long-run average total cost curve exhibiting increasing returns to scale is:

Negative

In perfectly competitive long-run equilibrium:

all firms produce at the minimum point of their average total cost curves.

Figure: Profit Maximizing) The figure shows cost curves for a firm operating in a perfectly competitive market. Curve M must cross Curves N and O:

at their minimum points.

If marginal cost is equal to average total cost, then:

average total cost is at its minimum.

Total cost divided by the quantity of output produced is:

average total cost.

Ashley Bakery expects its marginal cost curve will eventually slope upward, because in baking there is (are):

diminishing marginal returns.

Figure: Long-Run Average Cost) Output per period in the region B to C indicates that a firm is experiencing:

diseconomies of scale.

Diminishing marginal returns means that:

each additional unit of an input used will increase output, but by smaller and smaller amounts

A perfectly competitive firm will earn a profit and will continue producing the profit-maximizing quantity of output in the short run if price is:

greater than average total cost.

For a perfectly competitive firm, marginal revenue:

is equal to price.

32. (Figure: Cost Curves) If a firm currently was producing at point C on the ATC2 in the figure but anticipates increasing output to 225 units in the long run, the firm will build a ________ plant and experience ________.

larger; diseconomies of scale

Decreasing and increasing returns to scale account for the shape of the:

long-run average total cost curve.

A perfectly competitive firm's short-run supply curve is its:

marginal cost curve above the average variable cost curve.

The ________ is the increase in output obtained by hiring an additional worker.

marginal product

The competitive model assumes all of the following except:

patents and copyrights

A perfectly competitive firm is a:

price-taker.

Figure: Profit Maximizing) The figure shows cost curves for a firm operating in a perfectly competitive market. If the market price is P3, the firm will produce quantity ________ and ________ in the short run.

q2; incur a loss

Figure: Profit Maximizing) The figure shows cost curves for a firm operating in a perfectly competitive market. If the market price is P4, the firm will produce quantity ________ and ________ in the short run.

q3; make a profit

A perfectly competitive firm's marginal cost curve above the average variable cost curve is its:

short-run supply curve.

In the short run

some inputs are fixed and some inputs are variable.

Perfect competition is characterized by:

the inability of any one firm to influence price.

Average variable cost is:

total variable cost divided by quantity.

Average variable cost is the ratio of:

variable cost to the quantity of output.

Table: Total Product and Marginal Product) Negative marginal returns begin when the ________ worker is added.

Eight

Table: Costs of Producing Bagels) The marginal cost of producing the second bagel is:

$0.10

Table: Costs of Producing Bagels) The average total cost of producing six bagels is:

$0.15

Table: Costs of Producing Bagels) The average total cost of producing two bagels is

$0.20

Table: Costs of Producing Bagels) The marginal cost of producing the sixth bagel is:

$0.20

Table: Costs of Producing Bagels) The total cost of producing two bagels is:

$0.40

Table: Costs of Producing Bagels) The total cost of producing six bagels is:

$0.90

Figure: Average Total Cost Curve) In the figure, the total cost of producing 10 pairs of boots is approximately:

$1,308.

Figure: Short-Run Costs) At seven units of output, average fixed cost is approximately ________, and average variable cost is approximately ________.

$40; $100

Figure: Perfectly Competitive Firm) The figure shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. The firm's total cost per day is:

$600.

Figure: Perfectly Competitive Firm) The figure shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. Given the market price, the firm's total revenue per day is:

$900.

Table: Total Product and Marginal Product) The marginal product of the second worker is:

20

Figure: Short-Run Costs II) Curve 1 crosses the average variable cost curve at:

3 units of output

Figure: Perfectly Competitive Firm) The figure shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. If the market price is $3.00, the firm will produce ________ units of output per day.

300

Figure: Revenues, Costs, and Profits) In the figure, if market price is $18, the profit-maximizing quantity of output is:

5

Figure: Short-Run Costs) The vertical difference between curve B and curve C at any quantity of output is:

Average fixed cost

(Figure: Short-Run Costs) B is the ________ cost curve.

Average total

Figure: Short-Run Costs II) Curve 2 is the ________ cost curve.

Average total

Figure: Short-Run Costs II) Curve 3 is the ________ cost curve.

Average variable

Figure: Long-Run Average Cost) Output per period in the region from 0 to A indicates that a firm is experiencing:

Economies of sale

Figure: Long-Run Average Cost) Output per period in the region A to B indicates that a firm is experiencing:

Constant returns to scale

Figure: Profit Maximizing) The figure shows cost curves for a firm operating in a perfectly competitive market. The MC curve is represented in the figure by ________.

Curve M

Figure: Profit Maximizing) The figure shows cost curves for a firm operating in a perfectly competitive market. The ATC curve is represented by which of the following curves in the figure?

Curve N

Figure: Perfectly Competitive Firm) The figure shows a perfectly competitive firm that faces demand curve d, has the cost curves shown, and maximizes profit. If the firm faces a market price of $3.00, its total profit per day is:

D) $300

A perfectly competitive industry is currently in a state of long-run equilibrium. Which of the following must be true?

P = MR = MC = ATC

The slope of a long-run average total cost curve exhibiting decreasing returns to scale is:

Positive

Figure: Profit Maximizing) The figure shows cost curves for a firm operating in a perfectly competitive market. If the market price is less than P2, the firm will ________ in the short run.

Shut down

Figure: Short-Run Costs II) Curve 1 crosses the average total cost curve at:

The minimum value of curve 2

Firms in the model of perfect competition will:

increase output up to the point that the marginal revenue is equal to the marginal cost.

If a firm experiences lower costs per unit as it increases production in the long run, this is an example of:

increasing returns to scale.