Exam 2 (Part 4)

A firm's total revenue in perfect competition is: A. found by multiplying its output by the price at which it sells that output. B. perfectly elastic C. a linear, downward-sloping line. D. a linear, horizontal line.

A

Marginal cost _______ over the range of increasing marginal returns and _______ over the range of diminishing marginal returns. A. falls; increases B. increases; falls C. is constant; rises D. increases; is constant

A

The marginal cost curve intersects the average variable cost curve at: A. its lowest point B. its endpoint C. its maximum D. no point; the curves don't intersect

A

Assuming that all other factors of production are held constant, marginal product is the change in ________ output resulting from a 1-unit change in _______ A. per unit; a fixed input B. total; a variable input C. total; a fixed input D. total; average product

B

Suppose that the market for candy canes operates under conditions of perfect competition, that it is in long-run equilibrium, and that the price of each candy cane is $0.10. Based on the information given, we can conclude that the average total cost of producing candy canes: A. It is not possible to answer based on the information given. B. equals $0.10. C. is less than $0.10. D. is greater than $0.10.

B

The industry characterized by a few interdependent firms where there are barriers to entry is called: A. monopolistic competition. B. oligopoly. C. monopoly. D. perfect competition.

B

A line representing all the possible combinations of two commodities that a consumer can purchase at a particular time, given the market prices of the commodities and the consumer's income, is a(n): A. income consumption curve. B. indifference curve. C. budget constraint. D. consumption line.

C

If a monopolist is producing a quantity that generates MC < MR, then profit: A. can be increased by decreasing production. B. is maximized. C. can be increased by increasing production. D. is maximized only if MC = P.

C

In the long run: A. the firm considers all factors as fixed B. production is always greater than zero C. the firm considers all factors as variable D. production choices are more limited than in the short run

C

Product differentiation under monopolistic competition means that each firm: A. maximizes profit where MC = P. B. receives economic profits. C. faces a downward-sloping demand curve. D. charges the same price.

C

Economic profit: A. is the horizontal distance between total cost and total revenue. B. exists when total revenue exceeds marginal revenue. C. can't exist in perfectly competitive markets D. is the vertical distance between total revenue and total cost at a particular level of output.

D

If a firm produces 10 units of output and incurs $35 in average total cost and $5 in average fixed cost, average variable cost is: A. $300 B. $35 C. $50 D. $30

D