Economics Midterm 3 & Quizes

_______________ include both the private costs incurred by firms and also costs incurred by third parties outside the production process.

Social costs

The marginal revenue curve for a monopolist ____________________ the market demand curve.

always lies beneath

In microeconomics, the term ___________________ is synonymous with decreasing returns of scale.

diseconomies of scale

The problem of pollution typically arises in ______________ economies around the world.

high or low-income

The term "constant returns to scale" describes a situation where

expanding all inputs does not change the average cost of production.

Which of the following is an example of economic output that can injure the environment?

radio-active waste leaking into a river, and all of the above

What qualities would ideally suit a monopolistic firm with regard to barriers to entry?

sufficient strength to prevent or discourage potential competitors from entering the market

Whatever the firm's quantity of production, _____________ must exceed total costs if it is to earn a profit.

total revenue

The two primary factors determining monopoly market power are the firm's

demand curve and its cost structure

The equilibrium price and quantity when social costs are taken into account are

Price = $55, Quantity = 30

In addition to the current levels of air and water pollution, a list of important environmental issues would most likely include:

extinction of species and all of the above

Which of the following is most likely to be a monopoly?

local electricity distributor

When a natural monopoly exists in a given industry, the per-unit costs of production will be

lowest when a single firm generates the entire output of the industry.

The term _____________ is used to describe the additional cost of producing one more unit.

marginal cost

. A monopolist is able to maximize its profits by

producing output where MR = MC and charging a price along the demand curve.

In order to determine the average variable cost, the firm's variable costs are divided by _______________________.

the quantity of output

A pollution charge is a form of tax imposed on

the quantity of pollution that a firm emits.

____________________________ occur when the marginal gain in output diminishes as each additional unit of input is added.

Diminishing marginal returns

The slope of the demand curve for a monopoly firm is

downward sloping

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 _________________ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.

price taker

A situation where the level of output, scale and average costs are all rising is called

both a and b are correct A. decreasing returns to scale B. diseconomies of scale

The objective of imposing a higher pollution tax is to

provide adequate incentive for firms to reduce their emissions by more.

___________ include all spending on labor, machinery, tools, and supplies purchased from other firms.

Total costs

_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price.

Total revenue

______________ include all of the costs of production that increase with the quantity produced.

Variable Costs

An _________________ is calculated by subtracting the firm's costs from its total revenues,

accounting profit; excluding opportunity cost

The demand curve perceived by a perfectly competitive firm

is horizontal

Market failure describes a situation in which the market itself ______________________ in a way that balances social costs and benefits.

fails to allocate resources efficiently

When a monopolist increases sales by one unit,

it loses some marginal revenue and all of the above.

Because of the nature of the comprehensive environmental laws adopted during the late 1960s and early 1970s by the United States government, these laws are typically referred to as

positive regualtions

If no externalities of pollution exist in a particular industry, the interaction of demand and supply _________________________ .

will coordinate social costs and benefits

If you are highly asthmatic, then having high levels of industrial air pollutants waft over your house every day

would be a negative externality.

The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls.

economies of scale

A firm that holds a monopoly position in the market place is

a price maker

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

Which of the following falls outside of the classification of business expenses that fall into the category of fixed costs?

costs incurred in the act of producing

Which of the following falls outside of the classification of business expenditures that fall into the category of variable costs?

costs of research and development

If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.

decreasing returns to scale

If a steel manufacturer considers the costs of labor and materials, as well as the broader costs of environmental injuries resulting from its manufacturing processes,

it is factoring in the social costs of the pollution it generates.

Why would a typical U.S. business fail to take the social costs of pollution into consideration during the development of their operating strategies?

it isn't required to pay any of the cost of cleaning up its pollution

In economics, the term "shutdown point" refers to the point where the

marginal cost curve crosses the average variable cost curve.

______________________ refers to the additional revenue gained from selling one more unit.

marginal revenue

The largest cattle rancher in a given region will be unable to have a __________ when sufficient numbers of smaller cattle ranchers provide sources of competition.

monopoly

Following the assumption that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency?

output will be too small and its price too high

For a pure monopoly to exist,

there is a single seller in a particular industry

Which of the following denotes the typical shape of the monopolist's total cost curve?

total costs rise and grow steeper as output rises

The marginal cost curve is generally ______________, because diminishing marginal returns implies that additional units are ________________________.

upward-sloping; more costly to produce

When J.K. Rowling exerts copyright ownership of her literary works, she creates a monopoly by restricting

entry into the market

If a perfectly competitive firm is a price taker, then

pressure from competing firms will force acceptance of the prevailing market price.

If a firm's revenues do not cover its average variable costs, then that firm has reached its _________________ .

shutdown point

The total revenue curve for a monopolist will

start low, rise, and then decline.

If it was possible for one company to gain ownership control all of the uranium processing plants in the US, then

that firm could set up barriers to entry to discourage competition