Homework: Chapter 15 Homework
horizontal at the shutdown price and upward sloping at prices above the shutdown point
The market supply curve in the short run is _______. A. an upward-sloping curve that shows that as the market price rises the quantity supplied increases B. horizontal at the shutdown price and upward sloping at prices above the shutdown point C. the same as the horizontal sum of the firms' marginal cost curves D. the same as the average total cost curve for the entire industry
makes a positive economic profit
The firm _____ in the short run.
supply of chicken wings increases; falls
The good news for restaurants is that the _______ and the price restaurants pay for chicken wings _______. A. supply of chicken wings decreases; rises B. supply of chicken wings increases; rises C. supply of chicken wings increases; falls D. demand for chicken wings decreases; falls
2000
The graph shows the short-run cost curves of a toy producer. The market has 1,000 identical toy producers. The market price of a toy is $21. In the short run, the firm produces _____ toys a week.
incur an economic loss
The industry that produces portable CD players is in long-run equilibrium. Then the demand for portable CD players decreases permanently. As a result, firms will
decreases; increases
A fall in the price of corn (the main chicken feed) _______ the marginal cost of producing chicken and _______ a farm's economic profit. A. decreases; decreases B. decreases; increases C. increases; increases D. increases; decreases
marginal revenue is less than average variable cost
A firm will shut down in the short run if at the profit-maximizing quantity, ______. A. marginal revenue is less than average fixed cost B. total revenue is less than total cost C. marginal revenue is less than average variable cost D. average total cost exceeds the market price
to lower their price to compete, which resulted in economic loss
As a result of the rise of Internet retailing of recorded music, the small traditional record stores had ___________. A. to set their price equal to minimum average total cost B. to lower their price to compete, which resulted in economic loss C. a decreased supply of recorded music which resulted in their prices rising above Internet prices D. to use new technology which raised their average total cost
lower; zero economic profit
At the new long-run equilibrium, the price of a drone is _______ and drone producers make _______. A. lower; an economic profit B. lower; zero economic profit C. higher; an economic profit D. unchanged; zero economic profit
demand for; increasing
California's commercial drone industry is taking off Customers are finding ever more creative ways to use drones, and 3E Robotics Inc., America's largest producer of consumer drones, expects sales to soar. Explain what is happening in the market for commercial drones. How would you expect the price of a drone to change in the short run and the long run? How would you expect the economic profit of a drone producer such as 3D Robotics to change in the short run and in the long run? The _______ drones is _______ in the short run. A. demand for; increasing B. the supply of; increasing C. demand for; decreasing D. supply of; decreasing
making positive economic profit; an incentive to enter
If firms in a competitive industry are ______, then in the long run, firms have ______ the industry. A. breaking even; an incentive to exit B. making zero economic profit; an incentive to enter C. incurring economic loss; no incentive to exit D. making positive economic profit; no incentive to enter E. making positive economic profit; an incentive to enter
market supply and market demand determine the price and quantity bought and sold in the market
In a perfectly competitive market in short-run equilibrium, _______. A. the price and quantity bought and sold in the market are determined by the shutdown point B. only demand determines the price and quantity bought and sold in the market because all firms are price takers C. only supply determines the price and quantity bought and sold in the market because the good has many substitutes D. market supply and market demand determine the price and quantity bought and sold in the market
when each firm is making zero economic profit and no firm has an incentive to enter the industry
In a perfectly competitive industry, a long-run equilibrium occurs ________. A. when firms are maximizing economic profit and some of them advertise their goods B. when firms are maximizing profit and only when economic loss does not exceed total fixed cost. C. when each firm is making zero economic profit and no firm has an incentive to enter the industry D. whenever firms have no incentive to shut down
it produces only a tiny proportion of the total output of a particular good and buyers are well informed about the prices of other firms
In a perfectly competitive market, the firm is a price taker because ______. A. each firms makes a slightly different product B. the price is dictated by the largest firm in the market, and if a given firm lowers its price other firms will conspire against it C. the price in the market is the price that maximizes each firm's producer surplus D. it produces only a tiny proportion of the total output of a particular good and buyers are well informed about the prices of other firms E. the firms in perfect competition are interdependent and if one firm charges a lower price, other firms will also lower their prices and all firms will incur an economic loss
firms can choose to enter the industry but they cannot choose the price at which to sell their good
In perfect competition, _______. A. many firms sell the same quantity of similar goods but they charge slightly different prices B. firms can choose to enter the industry but they cannot choose the price at which to sell their good C. each firm knows its price but its competitors don't D. firms already in business have advantages over firms that plan to enter the industry
marginal cost equals market price
In perfect competition, a firm maximizes its economic profit if it produces the output at which _______. A. market price equals marginal revenue B. economic profit equals zero in the short run C. marginal cost equals market price D. total revenue equals total cost
is a price taker and produces the quantity that maximizes its profit in both the short run and the long run
In perfect competition, each firm _______. A. is a price taker and produces the quantity that maximizes its profit in both the short run and the long run B. faces a perfectly inelastic demand for its product, so it can select the price that maximizes its profit C. produces as much as it can and either makes a profit or incurs a loss in the short run but breaks even in the long run D. can influence the price that it charges in the short run but not in the long run
entry increases
In the long run, _____ the supply of drones.
the price of coffee beans rises and coffee farmers make zero economic profit
In the long run, _______. A. coffee growers' economic losses increase B. the price of coffee beans rises and coffee farmers make zero economic profit C. the supply of coffee beans increases D. coffee growers enter the market
coffee growers incurred economic losses
In the short run, _______. A. the supply of coffee decreased B. coffee growers exited the market C. coffee growers incurred economic losses D. the demand for coffee decreased
rises; increases
In the short run, the equilibrium price of a drone _______ and the economic profit of drone producers _______. A. falls; decreases B. falls; remains unchanged C. rises; remains unchanged D. rises; increases
market price minus average total cost, multiplied by the quantity produced
In short-run equilibrium, each firm makes an economic profit equal to _______. A. marginal revenue minus average total cost B. marginal revenue minus marginal cost, multiplied by the quantity produced C. market price minus marginal cost D. market price minus average total cost, multiplied by the quantity produced
60
Meg's marginal revenue for each batch of cookies demanded is $
large; different
Monopolistic competition is a market in which a _____ number of firms compete by making similar but slightly _____ products. A. large; costlier B. small; cheaper C. small; different D. large; different
no close; a barrier
Monopoly is a market in which one firm sells a good or service that has _____ substitutes and _____ blocks the entry of new firms. A. no close; a barrier B. close; a barrier C. close; no barrier D. no close; no barrier
small; interdependent
Oligopoly is a market in which a _____ number of _____ firms compete. A. large; interdependent B. large; independent C. small; interdependent D. small; independent
the consumers' marginal benefit from the good equals the marginal cost of producing it
Perfect competition achieves efficiency if the market produces the quantity at which _______. A. consumer surplus is greater than producer surplus B. producer surplus equals zero C. the consumers' marginal benefit from the good equals the marginal cost of producing it D. marginal benefit is greater than marginal cost
many; identical; no barriers; are well informed
Perfect competition is a market in which there are _____ firms, each selling _____ product; many buyers; _____ to the entry of new firms into the industry; no advantage to established firms; and buyers and sellers _____ about prices. A. few; differentiated; no barriers; have no information B. many; identical; no barriers; are well informed C. many; identical; barriers; have no information D. few; differentiated; barriers; are well informed
price fell below minimum average variable cost
Record stores decided to exit the market rather than shut down temporarily because _______. A. price fell below minimum average fixed cost B. price fell below minimum average variable cost C. they were incapable of providing music downloads D. consumers prefer to shop online
not maximizing; increase
Rhonda's Turkey Farm produced 600 turkeys last week. The marginal cost was $11 a turkey, average variable cost was $30 a turkey, and the market price was $33 a turkey. Rhonda is ______ profit, so if nothing changes she will ______ the number of turkeys she produces to maximize her profit this week.
exit; leftward
Some firms will ______ the market, and the market supply curve will shift ______. A. enter; rightward B. exit; leftward C. exit; rightward D. enter; leftward
calculated as the sum of the quantities that firms produce when they maximize economic profit at each market price
The market supply in the short run is _______. A. calculated as the sum of the quantities that firms produce when they maximize economic profit at each market price B. calculated as the sum of the quantities supplied by all firms in the market at prices above their shutdown price C. illustrated as a curve that is the vertical sum of all the supply curves of the firms in the market when the number of firms remain constant D. illustrated as a curve that is the vertical sum of the marginal cost curves of all the firms in the market
perfect competition
The table shows the demand schedule for Meg's Fortune Cookies. Meg's Fortune Cookies operates in a market called ______. A. perfect competition B. an oligopoly C. a perfect oligopoly D. monopolistic competition E. a monopoly
decreased; greater than the market price
U.S. Steel Lays Off 756 With a drop in the demand for steel pipe and tube, U.S. Steel Corporation will idle plants in Ohio and Texas and lay off 756 workers. As U.S. Steel responded to the fall in demand, how did its marginal cost change? What can you say about minimum AVC in the plants that closed? As U.S. Steel responded to the fall in demand, its marginal cost ______. The minimum average variable cost in the plants that closed must have been ______. A. increased; greater than the market price B. increased; less than the market price C. decreased; greater than the market price D. decreased; equal to average fixed cost E. decreased; less than the market price
