Micro Exam 2
In economics, a firm that faces no competitors is referred to as _________________.
A monopoly
A firm that holds a monopoly position in the market place is
A price maker
Economic theory offers __________ about the full range of possible events and responses which can prevent ________ about how households will respond to changes in prices or incomes.
A systematic way of thinking Misguided conclusions
If the quality differences of similar products are mostly imperceptible to the average consumer's eyes, which of the following will most likely play a major role in influencing the decisions of purchasers?
Price of competing products
The term ___________ refers to a firm operating in a perfectly competitive market that must be take the prevailing market price for its product
Price taker
Idaho farmers can sell as large a quantity of their potato crop as they wish,
Provided each is willing to accept the prevailing market price.
In the ___________________ the perfectly competitive firm will seek out ___________________
Short run The quantity of output where profits are highest
If a firm's revenues do not cover its average variable costs, then that firm has reached its _________________ .
Shutdown point
The ___________ arises when a price changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price.
Substitution effect
Which of the following occurs simultaneously with an income effect?
Substitution effect
Economists are able to determine total utility by:
Summing up the marginal utilities of each unit consumed.
Which of the following will present the least amount of concern to a firm that has a monopoly over a particular industry?
The competitive actions of other business firms
In order to determine the average variable cost the firms variable costs are divided by
The quantity of output
In the US economy nearly half of all the workers employed by private firms work at
18,000 large firms that employ more than 500 workers
Approximately what percentage of the US labor force is employed by firms that have fewer than 100 employees?
35%
The US government has registered __________ on behalf of business firms to protect a particularly distinct element each has selected for its ability to aid consumers to easily ______________.
800,000 trademarks Identify the source of goods
An _________________ is calculated by subtracting the firm's costs from its total revenues, _______________________________ .
Accounting profit Excluding opportunity cost
The term ___________ refers to the additional utility provided by one unit of consumption.
Added utility
The fact that a consumer is not required to buy the goods that a given firm produces as well as the fact that the consumer might want the goods a firm produces but may choose to buy from other firms instead
Are two stark realities any business firm must recognize
In order to determine ____________ the firms total cot must be divided by the quantity of its output.
Average cost
Occasionally, _________________ may lead to pure monopoly; in other market conditions, they may limit competition _________________ .
Barriers to entry To a few oligopoly
Marginal utility can
Be positive, negative, or zero.
How does the U.S. Bureau of Labor Statistics gather information with regard to the typical consumption choices of Americans?
Consumer Expenditure Survey
The form of legal protection intended to prevent reproduction of original works is referred to as _________
Copyright
Intellectual property law is a body of law that includes
Copyright legislation as well as all of the above
It is said that in a perfectly competitive market, raising the price of a firms product form the prevailing market price of $179.00 to $199.00 ______________________
Could likely result in a notable loss of sales to competitors.
If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.
Decreasing returns to scale
Which of the following is most unlikely to present a barrier to entry into a market
Deregulation
____________ occur when the marginal gain in output diminishes as each additional unit of input is added.
Diminishing marginal returns
The term __________ is used to describe the common pattern whereby each marginal unit of a consumed good provides less of an addition to utility than the previous unit.
Diminishing marginal utility
In microeconomics the term _____________ is synonymous with decreasing returns of scale
Diseconomies of scale
Which of the following is most likely to cause variation in American household spending patterns?
Each of the above will cause a variation
The term __________ describes a situation where the quantity of output arises but he average cost of production falls.
Economies of scale
A manufacturer would likely make an ___________ in a market following the long-run process of beginning ans expanding production in response to ___________________
Entry A sustained pattern of profits
If the North American newsprint paper market has barriers to entry, then
Entry will be blocked even if firms are earning high profits.
The term "constant returns to scale" describes a situation where
Expanding all inputs does not change the average cost of production.
A firm's _________ consist of expenditures that must be made before production starts that typically, over the short run, _________ regardless of the level of production.
Fixed costs Do not change
An inferior good is a product
For which demand decreases as income increases
A perfectly competitive industry is a
Hypothetical extreme
Economic profit can be derived from calculating total revenues minus all of the firms costs
Including its opportunity costs
The term _____________ describes a situation where a ______________ causes a reduction in the buying power of income, even though actual income has not changed.
Income effect High price
____________ 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
In the business world, a _________________ is recognized as a legally acceptable way for any business to keep knowledge of its particular methods of production from being known by competing firms.
Trade secret
In microeconomics terms the ability of a good or a service to satisfy wants is called
Utility
___________ include all of the costs of production that increase with the quantity produced.
Variable costs
If a perfectly competitive firm is a price taker, then
Pressure from the competing firms will force acceptance of the prevailing market price.
When economists attempt to predict the spending patterns of US households, they will typically view the ____________ as a primary determining factor that influences the individual consumption choices that each will make.
Income level of each household.
Which of the following is most likely to be a monopoly
Local electricity distributor
The term ___________ is used to describe the additional cost of producing one more unit
Marginal cost
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
___________ arises where many firms are competing in a market to sell similar but differentiated products.
Monopolistic competition
The largest cattle rancher in a given region will be unable to have a __________ sufficient numbers of smaller cattle ranchers provide sources of the competition
Monopoly
A ___________ exists when the quantity demanded in the market is less than the quantity at the bottom of the long-run average cost curve
Natural monopoly
Deregulation occurs when a government eliminates or scales back rules relating to all but one of the following. Which one is it?
Natural monopoly
Approximately what portion of annual consumption is typically spent by American households on shelter?
One-third
Government ______________ regulations specify that inventors will maintain exclusive legal rights to their respective inventions for ______________ .
Patent A limited time
The use of sharp, temporary price cuts as a form of _________________ would enable traditional US automakers to discourage new competition from smaller electric car manufacturers.
Predatory pricing
When a business adopts a strategy of reducing and/or discontinuing production in response to a sustained pattern of losses, it is
Preparing to exit operations
