Micro quizlets

The marginal physical product of the third unit of labor in Figure 21.1 is

12.0 units per day.

Technological improvements cause

ATC to shift down.

A competitive firm

Is a price taker.

Refer to Table 21.5:Table 21.5 Total fixed costs in Table 21.5 are equal to

$15.

What is the marginal cost of the 120th unit of output in Figure 21.2?

$288.00.

Refer to Table 21.5: Table 21.5 The total cost of 3 units of output in Table 21.5 is

$30

Diminishing returns occur because

A firm increases the amount of a variable input without changing a fixed input.

A cartel is

A group of firms with an explicit, formal agreement to fix prices and output shares in a particular market.

The shutdown point occurs where price is below the minimum of

AVC.

The productivity of workers will increase in response to

An increase in the amount of physical capital per worker

Implicit costs

Are the value of resources used for which no direct payment is made.

Monopolists set prices

At the output where marginal revenue equals marginal cost.

For an oligopoly, a few firms cannot dominate in the long run unless

Barriers to entry exist.

High training costs make it more costly for consumers to switch products. This is an example of

Barriers to entry.

Which of the following is similar for oligopoly and monopolistic competition?

Both have market power.

Product differentiation occurs when

Buyers perceive differences in the products of several companies.

The marginal physical product is the

Change in total output associated with one additional unit of input.

A monopoly Is one of many sellers in a given market Charges higher prices than competitive firms, ceteris paribus. Maximizes profits at the output level where P = MC. Maximizes profits at the output level where P = MR.

Charges higher prices than competitive firms, ceteris paribus.

When economic profits exist in the market for a particular product, this is a signal to producers that

Consumers would like more scarce resources devoted to the production of this product.

A firm that makes zero economic profits

Covers all its costs, including a provision for normal profit.

What is the most likely response by rivals when an oligopolist cuts its price to increase its sales?

Cut their prices.

Refer to Figure 22.2 for a perfectly competitive firm. The profit-maximizing quantity of output is

D.

Like a competitive industry, a monopoly must

Deal with the law of demand.

For a competitive market in the long run,

Economic profits induce firms to enter until profits are normal.

Refer to Figure 22.3 for a perfectly competitive firm. If the market price is $15,

Economic profits will be zero.

Which of the following is a common barrier to entry in a monopoly market?

Economies of scale

Which of the following is an investment decision in a competitive market?

Entry or exit.

In long-run perfectly competitive equilibrium, marginal cost

Equals the minimum of the ATC.

If long-run economic losses are being experienced in a competitive market,

Equilibrium price will rise as firms exit.

If price is above the long-run competitive equilibrium level,

Firms will enter the market.

In a monopolistically competitive market with negative economic profits,

Firms will exit until economic profits are zero.

In the short run, when a firm produces zero output, total cost equals

Fixed costs.

Which of the following is a factor of production for the Little Biscuit Bread Company?

Flour.

In an effort to maximize profits, oligopolists could participate in all of the following but

Game theory.

In monopolistic competition, a firm

Has a downward-sloping demand curve.

A major difference between oligopoly and monopolistic competition is that oligopolies do not

Have many competitors.

Greater labor productivity means

Higher output per worker.

Which of the following is characteristic of a perfectly competitive market? A small number of firms. Identical products. Long-run economic profit. High barriers to entry.

Identical products.

There is lack of strong incentives in a monopoly industry, relative to a competitive industry to

Increase innovation.

The exit of firms from a market, ceteris paribus,

Increases the equilibrium price in the market.

If the entire output of a market is produced by a single seller, the firm

Is a monopoly

Entry into a market characterized by monopolistic competition

Is frequent because barriers to entry are low.

In the short run, which of the following is most likely a variable cost?

Labor and raw materials costs.

The perfectly competitive market structure includes all of the following except

Large advertising budgets

The period in which there are no fixed costs is the

Long run.

Intel's chief executive says the company might expand the technology it is using in its planned $2.5 billion chip-manufacturing factory in China if the U.S. government allows it, underscoring the technology giant's ambitions in the world's fourth-biggest economy. The Intel executive is making a

Long-run decision, and therefore an investment decision.

Which of the following rules is satisfied when a monopoly maximizes profits?

MR = MC.

Monopolists are price Takers, but competitive firms are price makers. Makers, but competitive firms are price takers. Makers, as are competitive firms. Takers, as are competitive firms.

Makers, but competitive firms are price takers.

The competitive market model is important because

Many industries function much like the competitive model.

A profit-maximizing producer seeks to

Maximize total profit.

The most desirable rate of output for a firm is the output that

Maximizes total profit

The profit motive can encourage businesses to do all of the following except

Mistreat customers.

Which of the following is an argument in favor of a competitive market structure rather than monopoly?

Monopolies produce less goods at a higher price than competitive markets, ceteris paribus.

If oligopolists start cutting prices to capture a larger market share, the result will be a

Movement down the market demand curve

Which of the following may not characterize an oligopoly?

No market power.

Which of the following is not a barrier to entry?

Perfect information.

A monopoly Maximizes profits at the output level where MR > MC. Produces less output than a competitive industry, ceteris paribus. Charges the same price as a competitive industry, ceteris paribus. Maximizes profits at the output where P = MR

Produces less output than a competitive industry, ceteris paribus

A monopoly

Produces less output than a competitive industry, ceteris paribus.

Refer to Figure 26.1 for a monopolistically competitive firm. The profit-maximizing output and price combination for this firm in the short run is

Q2,P4.

Price discrimination allows a producer to

Reap the highest possible average price for the quantity supplied.

The entry of firms into a market

Reduces the profits of existing firms in the market.

Other things being equal, as more firms enter a market, the market supply curve

Shifts to the right.

The period in which at least one input is fixed in quantity is the

Short run.

The marginal physical product of labor in Figure 21.1 is negative for the

Sixth worker.

Which of the following industries has the highest concentration ratio?

Soft drinks.

An investment decision involves choosing

The amount of plants and equipment and is a long-run decision.

For a monopolist, marginal revenue equals

The change in total revenue divided by the change in quantity.

Which of the following is likely to occur if a monopoly suddenly loses its ability to deny potential competitors entry into the market?

The market price of the product will fall.

If a new sushi restaurant opens, then

The market supply curve for sushi will shift to the right.

Which of the following does not contribute to a firm maintaining a monopoly?

The presence of many close substitutes for its product.

Which of the following is most likely a fixed cost?

The rent for a factory.

Perfectly competitive firms cannot individually affect market price because

There are many firms, none of which has a significant share of total output.

Economies of scale are reductions in average

Total cost that result from using operations of larger size.

A firm maximizes profit when

Total revenue exceeds total cost by the greatest amount

In monopolistic competition, a firm

Uses nonprice competition.

Which of the following industries is the best example of perfect competition?

Wholesale fresh flowers.

Which of the following is characteristic of a perfectly competitive market? Marginal revenue lower than price for each firm. Exit of small firms when profits are high for large firms. A small number of firms. Zero economic profit in the long run.

Zero economic profit in the long run.

What is the average fixed cost when output is 120 units in Figure 21.2?

$80.00.

What is the average fixed cost when output is 100 units in Figure 21.2?

$96.00.

Refer to the data in Figure 22.1. The profit-maximizing output for this firm is

200 units.

When a producer can control the market price for the good it sells, the producer

Has market power.

Refer to Table 21.5:Table 21.5 The average variable cost of the second unit of output in Table 21.5 is

$6.00.

Which of the following is a common barrier to entry in a monopoly market? A vertical supply curve. A rising long-run average total cost curve. A patent on a new product. Economic profits greater than zero for the monopolist.

A patent on a new product.

Marginal cost

Is the change in total cost associated with a one-unit increase in production.

Profit

Is the difference between total revenue and total cost.

Which of the following is true about a monopolistically competitive firm in the long run?

It tends to realize only a normal profit.

If a firm is producing at the kink in its demand curve and it decides to increase its price, according to the kinked demand model

It will lose market share to the firms that do not follow the price increase.

Refer to Figure 22.3 at quantity level E

Marginal cost is greater than marginal revenue, so it should cut production.

Ceteris paribus, the law of diminishing returns states that beyond some point, the

Marginal physical product of a factor of production diminishes as more of it is employed with a given quantity of other inputs.

In monopoly and perfect competition, a firm should expand production when

Marginal revenue is above marginal cost.

Market structure is determined by the

Number and relative size of the firms in an industry.

A monopolistically competitive firm can raise its price somewhat without fear of great change in unit sales because

Of product differentiation and brand loyalty.

Refer to Figure 24.3. Suppose this good could somehow be produced at no cost (that is, the total cost at any level of output was zero). This single-price monopoly firm would maximize profit by

Producing Q2 and charging P2.

Economists assume the principal motivation of producers is

Profit.

Oligopolists have a mutual interest in coordinating production decisions in order to maximize joint

Profits.