Micro

ATC=

AFC+AVC

The activity of rent seeking shifts the firm's_____ curve upward

ATC

over the output range for which marginal cost exceeds average variable cost but is less than average total cost,____

average fixed cost is falling more quickly than average variable cost is rising

the long run average cost curve traces out the lowest attainable_____ of producing each output

average total Cost

A firm experiences constant returns to scale when____

average total cost does not change when output changes; The LRAC curve is horizontal.

the output at which average product is a maximum is the same output a which ____ is a minimum

average variable cost

the output range over which average product increases is the output range over which____

average variable cost decreases

A monopoly arises two key factors, which are___

barriers to entry and no close substitutes

A single price monopoly_____

can sell a larger quantity only by setting a lower price

to increase output in the long run, a firm can_____

choose whether to change its plant as well as the quantity of labor it hires

When the firm cannot lower its average total cost by changing its plant, then it is operating on its long run average cost curve at a point with____

constant returns to scale

When a firm practices perfect price discrimination_____

consumer surplus is eliminated, it sells each unit of output for the highest price someone is willing to pay for it, the demand curve becomes the marginal revenue curve.

When a monopoly that produces a service practices perfect price discrimination,_____

consumer surplus is zero

at competitive equilibrium, the sun of _____ and ____ is _____

consumer surplus; producer surplus; maximized

TC

cost of all factors

TFC

cost of fixed factors

TVC

cost of variable factors

in a market in which the smallest output at which long-run average cost reaches its lowest level is large relative to market demand, the market is____

either an oligopoly or a monopoly

At the competitive equilibrium, marginal social cost____ marginal social benefit

equals

The social cost of monopoly can ____ the deadweight loss because of rent seeking

exceed

a brand name provides an___ to the producer to achieve ____ and ___ quality

high; consistent

the short run market supply curve is_____ at the shutdown point

horizontal

To increase output in the short run, a firm must___

increase the quantity of a variable factor

If marginal cost exceeds ATC and output increases, ATC ____ and AVC____

increases; increases

Product differentiation___

is making a product that is a close substitute but not a perfect substitute for the products of other firms.

A firm's supply curve____

is the same as the marginal cost curve at all points above minimum average variable cost

When a firm is producing a given output at least possible cost,____

it is operating on its long-run average cost curve.

A monopoly faces a market constraint because to sell a ___ quantity, it must set____

larger; lower

When some firms exit a market in which firms incur economic losses, the market supply curve shifts ______, the market price ______, and each remaining firm's economic loss ______.

leftward; rises; decreases

when price is lowered to sell one more unit, the lower price results in a revenue____ and the increased quantity sold results in a revenue ____

loss; gain

A competitive market is in long-run equilibrium. Some firms in the market adopt new technology that reduces the average total cost of producing the good. In the long run, the price is _______, firms with the new technology make _______ economic profits, and firms with the old technology _______.

lower; zero; switch to the new technology or exit the market.

at the long run competitive equilibrium, firms produce at the ____possible long run average cost

lowest

In a market undergoing technological change, firms that adopt the new technology _______. Firms that stick with the old technology _______.

make an economic profit and there is entry by new technology firms; either exit the market or switch to the new technology

The market for strawberries is in long-run equilibrium. Then a medical paper explains the health benefits of strawberries, which increases the demand for strawberries. As a result, firms will ______. Some firms will ______ the market, and the market supply curve will shift ______.

make normal profit; enter; rightward

Under an average cost pricing rule, the firm___

makes normal profit

if firms in a competitive market are___, then there is___ for firms to___ the market

making a positive economic profit; an incentive; exit

The market for pizza is perfectly competitive and has 1,000 firms. Each firm is identical. In long-run equilibrium, each firm is _______.

making normal profit

a monopoly can price discriminate among groups of buyers if___ across the two groups

marginal benefit differs

An example of a highly competitive market is the market for____

pizza

In perfect competition, a firm maximizes its economic profit if it produces the output at which____

price equals marginal cost

Perfect competition achieves efficiency if___

price equals marginal social benefit for consumers and price equals marginal social cost for producers

according to capture theory, regulation serves the self-interest of the ____

producer

Each firm takes the market price as given and produces its ______ output

profit maximizing

A brand name provides information about the ___ of a product to consumers

quality

As total variable cost increases, total fixed cost___

remains the same

when marginal product exceeds average product, average product is ____

rising

an increase in the wage rate that a firm pays its workers____

shifts both its MC curve and its ATC curve upward

if TFC increase, then the ATC curve___ and the MC curve___

shifts upward; does not shift

A brand name is a____

signal

Advertising is a___ to the consumer of a ___ quality product.

signal; high

A firm's minimum efficient scale is the ___ quantity of output at which long run average cost reaches its ___ level

smallest; lowest

if advertising is a signal, it doesn't need any___ product information

specific

the past expenditure on a plant has no resale value is called a ___

sunk cost

When a perfectly competitive industry is taken over by a single firm, the competitive industry's___ curve becomes the monopoly's___ curve

supply ; marginal cost

Market demand and supply determine____

the market price and output

Total product is__

the maximum output that a given quantity of labor can produce

Along the short run market supply curve,____

the number of firms remains constant

The short run is the time frame in which____ and the long run is the period of time in which____

the quantities of SOME factors are FIXED; The quantities of ALL factors are VARIED

A perfect price discriminating monopoly produces____

the same quantity of output as a perfectly competitive market.

The only costs that influence a firm's current decisions are

the short run cost of changing its labor inputs and the long run cost of changing its plant

in the short run, the equilibrium market price and the market output are determined by___

the short run market supply and demand

The market supply curve is _____ sloping at prices above the shutdown price

upward

The ATC curve eventually slopes ___ because AVC eventually ____

upward; increases

Rent seeking is the pursuit of___ by capturing economic____

wealth; rent

MC=

Change in TC/ change in Q

if diseconomies of scale are present and the firm ( ) all its inputs, its output ( )

Doubles; Less than doubles

AVC=

TVC/Q

Most production processes experience ( ) marginal returns initially, but all production processes eventually reach a point of ( ) marginal returns

Increasing; decreasing

Output

Q

When new firms enter a perfectly competitive market in which firms are making an economic profit, the market supply curve shifts _______, the market price _______, and each firm's output _______.

Rightward; falls; decreases

When your marginal grade exceeds you GPA, your GPA____

Rises

The vertical distance between the TC curve and the TVC curve is the___

TFC

TC=

TFC + TVC

AFC=

TFC/Q

TC/Q=

TFC/Q + TVC/Q

A monopoly that can perfectly price discriminate has a marginal revenue curve that is ______ the demand curve for the good that the monopoly produces. If a monopoly can perfectly price discriminate, it produces ______ deadweight loss and is ______ efficient than a single-price monopoly.

The same as; no; more

The law of diminishing returns says that as the firm uses more of ______, with a given quantity of ______, _______ product of the variable factor eventually diminishes.

a variable factor of production; the fixed factor of production; marginal

Consumers get the most value out of their resources at____ and producers get the most value out of their resources at ____

all points on the market demand curve; all points on the market supply curve

with competitive rent seeking, a single price monopoly's_____

deadweight loss increases

Monopoly creates a_____ and is ____

deadweight loss; inefficient

The production function for a water bottling firm tells us that 2 workers working with 1 bottling machine can produce 10 bottles of water in an hour, and 2 workers working with 2 bottling machines can produce 16 bottles of water. When the firm increases the number of bottling machines from 1 to 2 and keeps the quantity of labor at 2 workers, it experiences_____

diminishing marginal product of capital

The production function exhibits eventual____ marginal product of labor and eventual____ marginal product of capital

diminishing; diminishing

When the firm can lower its average total cost by decreasing its plant, then it is operating at a point on its long-run average cost curve with _______.

diseconomies of scale

If the monopoly produces a quantity at which marginal revenue exceeds marginal cost, _____

economic profit increases if output increases

If in the short run, firms in monopolistic competition make ______ profit, then in the long run, new firms will enter the market. The ______ the good produced by each individual firm will ______. In the new long-run equilibrium, firms will make ______ profit.

economic; supply of; decrease; positive economic

When the firm can lower its average total cost by increasing its plant, then it is operating at a point on its long-run average cost curve with _______.

economies of scale

A natural monopoly regulated by marginal cost pricing rule is____

efficient and incurs an economic loss

according to social interest theory, the political and regulatory process allocates recourses___

efficiently

When economies of scale enable one firm to supply the entire market at the lowest possible cost, the_____

firm is a natural monopoly

Advertising expenditures are___ costs and the per unit cost__ as production increases

fixed; decreases

The U shape of the average total cost curve arises because of spreading total _______ cost over a larger output and eventually _______ returns.

fixed; diminishing

When a firm engages in discrimination between two types of buyers consumer surplus____, producer surplus___ and the firm sells a ____ quantity

increases; increases; greater

The market for portable CD players is in long-run equilibrium. Then the demand for portable CD players decreases. As a result, firms will ______. Some firms will ______ the market, and the market supply curve will shift ______.

incur an economic loss; exit; leftward

A profit maximizing monopoly never produces an output in the____ range of its___ curve

inelastic; demand

A signal is an action taken by an ___ person to send a message to ____ people

informed; uninformed

Sunk cost is ____ to a firm's ____ decisions

irrelevant; current

A price cap regulation_____

is a price ceiling

in perfect competition, each firm_____

is a price taker

The social cost of a monopoly___

is greater with rent seeking than it otherwise would be.

In a competitive market, the market demand curve measures___

marginal social benefit if the people who consume a good or service are the only ones who benefit from it

In a competitive market, the market supply curve measures____

marginal social cost if the firms that produce a good or a service bear all the costs of producing it.

at the competitive equilibrium, the sum of consumer surplus and producer surplus is____

maximized

The firm's production function is the relationship between the ____ and ____

maximum output attainable; the quantities of both labor and capital

A monopoly ___ produces an output in the inelastic range of the market demand because it could charge a ___ price, produce a___ quantity, and ____ its profit

never; higher; smaller; increase

in perfect competition, there are ____ on entry into a market

no restrictions

perfect competition arises if each firm is perceived to produce a good or service that has ____characteristics

no unique

total fix cost includes

normal profit

The smallest quantity of output at which long run average cost is at a minimum is a firm's____

minimum efficient scale