Test 3 Chapters 11 and 12

c. ​correct if the firm is covering all of its variable costs.

"I'm losing money, but since my fixed costs are so high, I simply cannot afford to shut down." If the firm were attempting to maximize profit, this decision may be: a. ​correct if price is less than average variable cost. b. ​incorrect since a firm should shut down whenever price falls below average total cost in the short run. c. ​correct if the firm is covering all of its variable costs. d. ​incorrect because a firm experiencing economic losses should never continue to operate.

b. ​fourth

# of Pickers Total # of Oranges Picked 1 5,000 2 10,000 3 15,000 4 19,000 5 20,350 6 27,000 7 30,000 8 31,000 9 30,000 ​Refer to Exhibit 11-2. The marginal product of labor begins to diminish with the addition of the ____ picker. a. ​eighth b. ​fourth c. ​fifth d. ​seventh

d. ​$200 million.

A firm has $300 million in revenues and explicit costs of $100 million. If its owners have invested $150 million in the company at an opportunity cost of 10 percent a year, the firm's accounting profit is: a. ​$50 million. b. ​$150 million. c. ​$185 million. d. ​$200 million.

a. ​The firm has grown so large that average total cost increases as output expands.

A firm is operating at a scale where diseconomies of scale are present. Which of the following could help explain what that means? a. ​The firm has grown so large that average total cost increases as output expands. b. ​The firm is operating at a scale where average total cost is constant as output expands. c. ​The firm is operating at a scale where the average total cost of production is falling as output expands. d. ​The firm is operating at a scale where total fixed costs are not minimized.

horizontal

A fixed cost curve is always a(n) _____ line because, by definition, fixed costs are the same at all output levels.

a. ​horizontal and perfectly elastic.

A perfectly competitive firm faces a demand curve that is:​ a. ​horizontal and perfectly elastic. b. ​vertical and perfectly inelastic. c. ​horizontal and perfectly inelastic. d. ​vertical and perfectly elastic.

a. ​the price is less than minimum average variable cost.

A profit-maximizing, price-taking firm should cease production whenever:​ a. ​the price is less than minimum average variable cost. b. ​the firm is earning zero economic profit. c. ​the firm is making a loss. d. ​the price is less than minimum average fixed cost.

implicit

Accounting profits equal actual revenues minus actual expenditures of cash (explicit costs), so they do not include _____ costs.

input; technology

Any particular cost curve is based on the assumption that_______ prices and ______ are constant.

exceeds; equals

As entry into a profitable industry pushes down the market price, producers will move from a situation where price _______average total cost to one where price ______ average total cost.

d. ​is less than; equals

As exit from a perfectly competitive industry that is currently unprofitable pushes up the market price, producers will move from a situation where price ____ average total cost to one where price ____ average total cost. a. ​equals; is less than. b. ​exceeds; equals. c. ​equals; exceeds. d. ​is less than; equals.

diminishing marginal product.

As the amount of a variable input is increased, the amount of other fixed inputs being held constant, a point will ultimately be reached beyond which marginal product will decline. This point is called ______.

c. ​$50,000; -$30,000

Assume Brad worked as a contractor for a year and had revenues of $120,000 and explicit cost of $70,000. If he could have been paid $80,000 working for a computer company, his accounting profit as a contractor was ____ and his economic profit was ____. a. ​$10,000; $50,000 b. ​$40,000; $50,000 c. ​$50,000; -$30,000 d. ​$50,000; $40,000

b. ​There is not enough information to answer the question.

Assume that a firm's total revenue is less than its total cost for the level of output it is producing. In the short run, this firm should: a. ​shut down. b. ​There is not enough information to answer the question. c. ​expand output. d. ​contract output.

d. ​a loss of $7.50

Assume that the equilibrium price in a perfectly competitive industry is $4.25. If a firm in this industry produced and sold 10 units with an average total cost of $5.00, what would be the result would be: a. ​a loss of $0.75 b. ​a profit of $0.75 c. ​a profit of $7.50 d. ​a loss of $7.50

a. ​a loss of $7.50

Assume that the equilibrium price in a perfectly competitive industry is $4.25. If a firm in this industry produced and sold 10 units with an average total cost of $5.00, what would be the result would be: a. ​a loss of $7.50 b. ​a profit of $7.50 c. ​a profit of $0.75 d. ​a loss of $0.75

minimum efficient

At the ______ scale, a plant has exhausted its economies of scale and the long-run average total costs are minimized.

average total cost; the market price

At the level of output chosen by a competitive firm, total cost equals _______ times quantity, while total revenue equals ________ times quantity.

d. ​continue operating at that output level in the short term, since total revenue will cover all of the firm's variable costs and some of its fixed costs.

At the level of output where marginal revenue equals marginal cost, price is less than average total cost but greater than average variable cost. In this instance, a profit-maximizing firm should:​ a. ​continue operating at that output level in the short term, since total revenue will cover all of the firm's fixed costs and a portion of its variable costs. b. ​decrease output to where marginal revenue exceeds marginal cost by the greatest dollar amount. c. ​cease production as it is incurring an economic loss. d. ​continue operating at that output level in the short term, since total revenue will cover all of the firm's variable costs and some of its fixed costs.

a. ​continue operating at that output level in the short term, since total revenue will cover all of the firm's variable costs and some of its fixed costs.

At the level of output where marginal revenue equals marginal cost, price is less than average total cost but greater than average variable cost. In this instance, a profit-maximizing firm should:​ a. ​continue operating at that output level in the short term, since total revenue will cover all of the firm's variable costs and some of its fixed costs. b. ​decrease output to where marginal revenue exceeds marginal cost by the greatest dollar amount. c. ​continue operating at that output level in the short term, since total revenue will cover all of the firm's fixed costs and a portion of its variable costs. d. ​cease production as it is incurring an economic loss.

total fixed cost; level of output

Average fixed cost equals ______ divided by the ______ produced.

total cost; the level of output

Average total cost equals ______ divided by the _____ produced.

identical (homogeneous)

Because consumers believe that all firms in a perfectly competitive market sell _______ products, the products of all the firms are perfect substitutes.

Short; long

Because it takes more time to vary some inputs than others, we must distinguish between the _____ run and the _____ run.

easy; large

Because of ______ market entry and exit, perfectly competitive markets generally consist of a(n) ______ number of small suppliers.

many; small

Because perfectly competitive markets have _______ buyers and sellers, each firm is so ______ in relation to the industry that its production decisions have no impact on the market.

horizontal; entire

Because perfectly competitive sellers can sell all they want at the market price, their demand curve is _______ at the market price over the ______ range of output that they could possibly produce.

variable costs

Costs that are not fixed are called ______

implicit; explicit

Economists consider a zero economic profit a normal profit because it means that the firm is covering both_____ and _____ costs—the total opportunity cost of its resources.

maximize

Economists generally assume that the ultimate goal of a firm is to _____ profits.

monetary

Explicit costs are input costs that require a(n) _________payment.

do not vary

Fixed costs are costs that ______ with the level of output.

variable

If a firm cannot generate enough revenues to cover its _____ costs, then it will have larger losses if it operates than if it shuts down in the short run.

d. ​industry output will rise, good B will fall in price, and economic profits will tend to disappear.

If perfectly competitive industry B is currently realizing economic profits, we would expect that:​ a. ​industry output will rise, good B will fall in price, and economic profits will tend to increase. b. ​industry output will fall, good B will fall in price, and economic profits will tend to disappear. c. ​industry output will fall, good B will rise in price, and economic profits will tend to disappear. d. ​industry output will rise, good B will fall in price, and economic profits will tend to disappear.

enter the industry; expand

If perfectly competitive producers are currently making economic profits, the market supply curve will shift to the right over time as more firms ________ and existing firms ______.

c. ​shift down

If the market demand curve in a perfectly competitive industry shifts left, the demand curve for each existing firm will:​ a. ​shift right. b. ​shift up. c. ​shift down. d. ​shift left.

economic profits.; economic losses; zero economic profits

If total revenue is greater than total costs at its profit-maximizing output level, a firm is generating ________. If total revenue is less than total costs, the firm is generating ________. If total revenue equals total costs, the firm is earning _________.

do not change

In a constant-cost industry, the prices of inputs _______ as output is expanded.

total revenue; total costs and marginal revenue; marginal costs.

In all types of market environments, firms will maximize profits at that output that maximizes the difference between ______ and ______, which is the same output level where ______ equals ________.

rise

In an increasing-cost industry, the cost curves of the individual firms _____as the total output of the industry increases.

b. ​at a level of output such that all of the above are true.

In long-run equilibrium, the perfectly competitive firm produces:​ a. ​where its long-run average cost curve is tangent to its horizontal demand curve. b. ​at a level of output such that all of the above are true. c. ​at the lowest point on its long-run average cost curve. d. ​where P = MC = AC.

b. False

In order to maximize profits, a firm should produce the level of output at which total revenue is maximized. a. True b. False

marginal revenu

In perfect competition, we know that _________ and price are equal.

short; variable

In the ______ run, a company cannot vary its plant size and equipment, so the firm can only expand output by employing more_______ inputs.

variable

In the long run, all costs are _____ costs and will change as output changes.

a. True

In the long run, firms can vary all inputs in the production process. a. True b. False

b. ​MC

In the short run, ATC is not always higher than a. ​AFC b. ​MC c. ​Zero d. ​AVC

going out of business

In the short run, fixed costs cannot be avoided without ______.

additional

Marginal costs are the ______ costs associated with the "last" unit of output produced.

c. ​average revenue at all levels of output.

Marginal revenue for a perfectly competitive firm equals:​ a. ​marginal cost at all levels of output. b. ​the addition to total cost from producing one more unit of output. c. ​average revenue at all levels of output. d. ​average total cost at all levels of output.

a. ​the addition to total revenue from selling one more unit of output.

Marginal revenue is: a. ​the addition to total revenue from selling one more unit of output. b. ​the addition to total profit from selling one more unit of output. c. ​the additional cost incurred from producing one more unit of output. d. ​the addition to total output from hiring one more unit of labor.

marginal benefit; marginal cost

Once the competitive equilibrium is reached, the buyers' ______ equals the sellers' _______.

zero economic profits

Only at ________ is the tendency for firms either to enter or leave the business eliminated.

large; homogeneous (standardized); easy

Perfect competition is a market structure involving a(n) _____ number of buyers and sellers, a(n) _______ product, and ______ market entry and exit.

price takers

Perfectly competitive firms are _______, who must accept the market price as determined by the forces of demand and supply.

Total revenues; total costs

Profits are defined as total______ minus.________

d. ​It is falling with increased output.

Rose, who grows geraniums to sell, is currently producing a level of output at which her marginal cost equals her average variable cost. What must be true about Rose's average total cost at this level of output? a. ​It is at a maximum. b. ​It is equal to average variable cost. c. ​It is at a minimum. d. ​It is falling with increased output.

planning

The LRATC curve is often called a(n) ______ curve because it represents the cost data relevant to a firm when it is planning policy relating to scale of operations, output, and price over a long period of time.

diminishing marginal

The average total cost curve rises at high levels of output because of ______ product.

b. False

The behavior of an individual perfectly competitive firm has a perceptible influence on the market price. a. True b. False

most valuable

The cost of producing a good is measured by the worth of the ____________ alternative that was given up to obtain the resource.

All

The long run is a period of time in which the firm can adjust ____ inputs.

average total cost curve

The long-run equilibrium output in perfect competition occurs at the lowest point on the average total cost curve, so the equilibrium condition in the long run in perfect competition is for firms to produce at that output that minimizes the _________.

fixed costs

The loss a firm would bear if it shuts down would be equal to ______.

small

The marginal product of any single input is the change in total product resulting from a(n) ______ change in the amount of that input used.

a. true

The market demand curve in a perfectly competitive industry is downward sloping, while the demand curve faced by an individual perfectly competitive firm is horizontal. a. True b. False

total revenues; total costs

The objective of a firm is to maximize profits by producing the amount that maximizes the difference between its ______ and ________.

average fixed

The reason for high average total costs when a firm is producing a very small amount of output is the high ______ costs.

input costs

The shape of the long-run supply curve depends on the extent to which ________change with the entry or exit of firms in the industry.

input prices

The short-run market supply curve is the horizontal summation of the individual firms' supply curves, providing that ________ are not affected by increased production by existing firms.

marginal cost; average variable cost

The short-run supply curve of an individual competitive seller is identical with that portion of the ______ curve that lies above the minimum of the _______ curve.

fixed costs; variable costs

The short-run total costs of a business fall into two distinct categories: _______ and ______.

total fixed cost

The sum of a firm's fixed costs is called its ______.

fixed costs; variable costs

The sum of a firm's total ______ and total ______ is called its total cost.

total variable cost

The sum of a firm's variable costs is called its _______

output

The total product schedule shows the total amount of ______ generated as the level of the variable input increases.

allocative

There is ______ efficiency in perfect competition because and production is allocated to reflect consumers' wants.

productive

There is a(n) _______ efficiency in perfect competition because the firm produces at the minimum of the ATC curve.

quantity of units sold

Total revenue for a perfectly competitive firm equals the market price times the ________

less; more

When AVC is falling, MC must be _____ than AVC; and when AVC is rising, MC must be _____ than AVC

economies; constant returns; diseconomies

When LRATC falls as output expands, _______ of scale occur. When the LRATC does not vary with output, the firm faces _______ to scale. When the LRATC rises as output expands, ______ of scale occur.

average total costs; average variable costs

When price is less than _______ but more than ______, a firm produces in the short run, but at a loss.

a. ​When firms have no incentives to enter or exit.

When would you expect economic profits in an industry to be zero?​ a. ​When firms have no incentives to enter or exit. b. ​When firms are entering the industry. c. ​When existing firms are growing. d. ​When firms are leaving the industry.

b. False

Whenever marginal revenue is greater than marginal cost, a profit-maximizing firm should reduce its output. a. True b. False

opportunity

Whenever we talk about cost—explicit or implicit—we are talking about ______ cost.

b. ​ice cream

Which of the following is most likely a constant cost industry?​ a. ​oil b. ​ice cream c. ​lumber d. ​coal

b. ​The long run is of sufficient length to allow a firm to alter its plant capacity and all other factors of production.

Which of the following most accurately describes the long-run period? a. ​The long run is of sufficient length to allow a firm to transform economic losses into economic profits. b. ​The long run is of sufficient length to allow a firm to alter its plant capacity and all other factors of production. c. ​The long run is a period of time in which a firm is unable to vary some of its factors of production. d. ​In the long run, the firm is able to expand output by utilizing additional workers and raw materials, but not physical capital.

b. ​A profit-maximizing firm may produce any output level at which P < LRATC.

Which of the following statements is not characteristic of a perfectly competitive industry in long-run equilibrium?Ceteris paribus, there is no tendency for firms to either enter or exit the industry. a. ​Ceteris paribus, there is no tendency for firms to either enter or exit the industry. b. ​A profit-maximizing firm may produce any output level at which P < LRATC. c. ​Every firm produces at an output level at which MC = LRATC. d. ​No firm earns an economic profit.

Sunk

______ costs are costs that have already been incurred and cannot be recovered.

Average variable cost

______ equals total variable cost divided by the level of output produced.

Marginal revenue

_______ is the additional revenue derived from the sale of one more unit of the good.

Diseconomies

_______ of scale may occur as a firm finds it increasingly difficult to handle the complexities of large-scale management.

Average revenue

_________ equals total revenue divided by the number of units of the product sold.

profit-maximizing level of output

a firm should always produce at the output where MR = MC

average total cost (ATC)

a per-unit cost of operation; total cost divided by output

average fixed cost (AFC)

a per-unit measure of fixed costs; fixed costs divided by output

average variable cost (AVC)

a per-unit measure of variable costs; variable costs divided by output

long run

a period over which all production inputs are variable

short run

a period too brief for some production inputs to be varied

constant-cost industry

an industry where input prices (and cost curves) do not change as industry output changes

decreasing-cost industry

an industry where input prices fall (and cost curves fall) as industry output rises

increasing-cost industry

an industry where input prices rise (and cost curves rise) as industry output rises

diminishing marginal product

as a variable input increases, with other inputs fixed, a point will be reached where the additions to output will eventually decline

fixed costs

costs that do not vary with the level of output

sunk costs

costs that have been incurred and cannot be recovered

variable costs

costs that vary with the level of output

d. ​four workers

http://sjc.cengagenow.com/ilrn/books/se1em07r/se1em07r.11.007_intro/a9fb3775-8422-49cc-ac50-c608f4fb6a05.PNG ​Refer to Exhibit 11-7. If the firm's goal is to maximize weekly output, how many workers should the firm employ each week? a. ​two workers b. ​one worker c. ​three workers d. ​four workers

c. C

http://sjc.cengagenow.com/ilrn/books/se1em07r/se1em07r.11.009_intro/3fff011e-8627-4e95-b1a6-6ad9419904df.PNG ​Refer to Exhibit 11-9. The short-run average total cost curve is the curve labeled: a. ​D. b. ​A. c. ​C. d. ​B.

c. ​both (a) and (b)

http://sjc.cengagenow.com/ilrn/books/se1em07r/se1em07r.11.010_intro/08224517-7e71-49bc-900d-f41ea30273f5.PNG ​Refer to Exhibit 11-10. At output level 0Q, average fixed cost equals: a. ​ED. b. ​QF. c. ​both (a) and (b) d. ​QD.

b. ​QE

http://sjc.cengagenow.com/ilrn/books/se1em07r/se1em07r.11.010_intro/08224517-7e71-49bc-900d-f41ea30273f5.PNG ​Refer to Exhibit 11-10. At output level 0Q, average variable cost equals: a. ​FE. b. ​QE. c. ​QF. d. ​QD.

a. ​0

http://sjc.cengagenow.com/ilrn/books/se1em07r/se1em07r.12.005_intro/053803d7-fcb9-4d0a-8007-0d748b70de2b.PNG Refer to Exhibit 12-5. A profit-maximizing firm in a perfectly competitive industry will produce ____ units of output if the market price equals $10.​ a. ​0 b. ​450 c. ​800 d. ​650

b. ​all variable costs.

http://sjc.cengagenow.com/ilrn/books/se1em07r/se1em07r.12.005_intro/053803d7-fcb9-4d0a-8007-0d748b70de2b.PNG Refer to Exhibit 12-5. At a market price of $30, total revenue is sufficient to pay:​ a. ​all costs, fixed and variable. b. ​all variable costs. c. ​all variable costs and a portion of fixed costs. d. ​only a portion of the variable costs.

b. ​positive economic profits.

http://sjc.cengagenow.com/ilrn/books/se1em07r/se1em07r.12.007_intro/fc28a692-26fb-4c23-8ae3-0aa7bd3d4007.PNG ​Refer to Exhibit 12-7. In the short-run, if the market price is higher than $10, the competitive firm will earn: a. ​losses and will shut down. b. ​positive economic profits. c. ​losses but will not shut down. d. ​zero economic profits.

c. ​$1,120

http://sjc.cengagenow.com/ilrn/books/se1em07r/se1em07r.12.075/72be4736-abb2-4ab2-89e8-eb84e0f017dc.PNG What is the maximum amount of profit the perfectly competitive firm depicted below could earn in the short run? a. ​$900 b. ​$1,260 c. ​$1,120 d. ​$2,000

constant returns to scale

occur in an output range where LRATC does not change as output varies

economies of scale

occur in an output range where LRATC falls as output increases

diseconomies of scale

occur in an output range where LRATC rises as output expands

marginal cost (MC)

the change in total costs resulting from a one-unit change in output

marginal product (MP)

the change in total output of a good that results from a one-unit change in input

Profits

the difference between total revenues and total costs

short-run market supply curve

the horizontal summation of the individual firms' supply curves in the market

marginal revenue (MR)

the increase in total revenue resulting from a one-unit increase in sales

implicit costs

the opportunity costs of production that do not require a monetary payment

explicit costs

the opportunity costs of production that require a monetary payment

minimum efficient scale

the output level where economies of scale are exhausted and constant returns to scale begin

short-run supply curve

the portion of the MC curve above the AVC curve

production function

the relationship between the quantity of inputs and the quantity of outputs

total cost (TC)

the sum of the firm's total fixed costs and total variable costs

total variable cost (TVC)

the sum of the firm's variable costs

total product (TP)

the total output of a good produced by the firm

average revenue (AR)

total revenue divided by the number of units sold

economic profits

total revenues minus explicit and implicit costs

accounting profits

total revenues minus total explicit costs

allocative efficiency

where P = MC and production will be allocated to reflect consumer preferences

productive efficiency

where a good or service is produced at the lowest possible cost

a. ​Its fixed costs will fall and its variable costs will rise.

​A firm replaces a machine by hiring 3 hourly production workers instead. a. ​Its fixed costs will fall and its variable costs will rise. b. ​Its fixed costs will rise and its variable costs will fall. c. ​Both its fixed and variable costs will fall. d. ​Both its fixed and variable costs will rise.

c. ​will lose all sales if it prices its product in excess of the market equilibrium price.

​A firm that is a price taker: a. ​can exert a major influence on the overall market. b. ​competes with other producers who produce differentiated products. c. ​will lose all sales if it prices its product in excess of the market equilibrium price. d. ​must be a relatively large producer compared to other firms in the market.

a. True

​An economic profit of zero indicates a satisfactory situation for the firm. a. True b. False

c. ​accountants do not always include all of the opportunity costs when calculating total production costs.

​An economist's measurement of profit differs from an accountant's in that: a. ​accountants calculate total revenue differently than do economists. b. ​economists do not always include all of the opportunity costs when calculating total production costs. c. ​accountants do not always include all of the opportunity costs when calculating total production costs. d. ​economic profit generally exceeds accounting profit.

d. ​Marginal cost must be greater than average total cost

​As quantity increases, which of the following must be true if average total costs are rising? a. ​Marginal cost must be less than average total cost. b. ​Average fixed cost must be increasing. c. ​Average fixed cost must be less than average variable cost. d. ​Marginal cost must be greater than average total cost.

d. ​$2000.

​Campbell recently began running his brother's lumber mill. Last month he took in $10,000 in sales revenue and paid $6,800 in out-of-pocket costs. He made an economic profit last month if his implicit costs were: a. ​$4800. b. ​$3200. c. ​$6600. d. ​$2000.

a. ​$550.

​Cassie produces and sells 400 jars of homemade jelly each month for $3 each. Each month, she pays $200 for jars, $150 for ingredients, and uses her own time, with an opportunity cost of $300. Her economic profits each month are: a. ​$550. b. ​$700. c. ​$850. d. ​$900.

c. ​keep the stand open because it is generating a normal profit.

​Darlene runs a fruit and vegetable stand in a medium-sized community where there are many such stands. Her weekly total revenue equals $3,500. Her weekly total cost of running the stand equals $3,500, consisting of $2,500 of variable costs and $1,000 of fixed costs. An economist would likely advise Darlene to: a. ​shut down as quickly as possible because the stand is generating losses. b. ​keep the stand open for a while longer because she is covering all of her fixed costs and some of her variable costs. c. ​keep the stand open because it is generating a normal profit. d. ​keep the stand open for a while longer because she is covering all of her variable costs and some of her fixed costs.

c. ​When implicit costs are zero

​Economic profits are equal to accounting profits: a. ​When implicit costs equal explicit costs b. ​In no cases c. ​When implicit costs are zero d. ​In all cases

a. ​less than accounting profits if implicit costs are greater than zero.

​Economic profits are: a. ​less than accounting profits if implicit costs are greater than zero. b. ​greater than accounting profits even if implicit costs are zero. c. ​less than accounting profits even if implicit costs are zero. d. ​greater than accounting profits if implicit costs are greater than zero.

d. ​maximize profits.

​Economists normally assume that the goal of a firm is to: a. ​sell products at the highest prices possible. b. ​maximize sales revenue. c. ​sell as many units of output as possible. d. ​maximize profits.

c. ​area BEQ0

​Exhibit 11-10 http://sjc.cengagenow.com/ilrn/books/se1em07r/se1em07r.11.010_intro/08224517-7e71-49bc-900d-f41ea30273f5.PNG ​Refer to Exhibit 11-10. At output level 0Q, total variable cost equals: a. ​area ADQ0. b. ​area CFQ0. c. ​area BEQ0. d. ​area ADEB.

c. ​It would be senseless for Farmer Brady to try to increase sales by lowering the price of his product. His entire output can be sold at the market price.

​Farmer Brady sells wheat in a market where sellers are price takers. Which of the following is true in regard to Farmer Brady's production and pricing decisions? a. ​Farmer Brady will be able to increase the total revenue from the sale of his wheat if he increases the price of the wheat. b. ​Since the market dictates the price of his product, Farmer Brady has no production decisions to make. c. ​It would be senseless for Farmer Brady to try to increase sales by lowering the price of his product. His entire output can be sold at the market price. d. ​Since the market dictates the price of his product, Farmer Brady will have no incentive to minimize per-unit production costs.

a. ​$39.09

​If average total costs are $40 and average variable cost are $20 at 10 units of output and the marginal cost of the 11th unit is $30, what is the average total cost of 11 units? a. ​$39.09 b. ​$30.00 c. ​$23.00 d. ​$20.09

b. ​the short run equilibrium price will be lower than the eventual long run equilibrium price.

​In a perfectly competitive market, in response to a permanent decrease in demand: a. ​the short run equilibrium price will be the same as than the eventual long run equilibrium price. b. ​the short run equilibrium price will be lower than the eventual long run equilibrium price. c. ​the short run equilibrium price will be higher than the eventual long run equilibrium price. d. ​we cannot know whether the short run equilibrium price will be below the eventual long run equilibrium price.

a. True

​In long-run equilibrium, a perfectly competitive firm produces the output level that minimizes average total cost. a. True b. False

a. ​The region of declining total product not illustrated anywhere in the available data.

​In the table below, which of the following is true? Labor T-Shirts 3 150 4 210 5 300 6 360 7 390 ​ ​ a. ​The region of declining total product not illustrated anywhere in the available data. b. ​the marginal product of the 5th worker is 60. c. ​the marginal product of the 3rd worker is 50. d. ​the marginal product of the 7th worker is -30.

a. ​the existing firms in the market do not have sufficient time to increase the size of their existing plants or build new factories

​The short run is a time period such that: a. ​the existing firms in the market do not have sufficient time to increase the size of their existing plants or build new factories. b. ​the existing firms in the industry do not have sufficient time to adjust their current rate of output. c. ​new entrants have sufficient time to build factories and enter the industry. d. ​the existing firms in the industry do not have sufficient time to adjust the quantity of any inputs which they employ.

c. ​All are opportunity costs.

​What do foregone interest on money invested in a firm, wages paid to production workers, interest paid on bank loans, and the purchase of parts for assembly have in common? a. ​All are implicit costs. b. ​All are explicit costs. c. ​All are opportunity costs. d. ​None are opportunity costs

d. ​All factors are variable in the long run.

​Which of the following factors of production is not variable in the long run? a. ​the size of the firm's plant b. ​land c. ​highly skilled labor d. ​All factors are variable in the long run.

d. ​The long run is of sufficient length to allow a firm to alter its plant capacity and all other factors of production.

​Which of the following most accurately describes the long-run period? a. ​The long run is a period of time in which a firm is unable to vary some of its factors of production. b. ​In the long run, the firm is able to expand output by utilizing additional workers and raw materials, but not physical capital. c. ​The long run is of sufficient length to allow a firm to transform economic losses into economic profits. d. ​The long run is of sufficient length to allow a firm to alter its plant capacity and all other factors of production.

d. ​Numerous competitors produce the same product and charge the market price.

​Why can't a firm in a perfectly competitive industry charge a price above the market-clearing price? a. ​Firms in a perfectly competitive industry face significant barriers to entry. b. ​Government-imposed price ceilings prevent prices from being raised. c. ​Perfectly competitive firms are price searchers. d. ​Numerous competitors produce the same product and charge the market price.