BUS 202 Midterm #3
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.
_______give government the power to block certain mergers, and in some cases, to break up large firms into smaller ones.
Antitrust laws
_______ 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
________________________ arises where many firms are competing in a market to sell similar but differentiated products.
Monopolistic competition
______________ include all of the costs of production that increase with the quantity produced.
Variable costs
Which company in the video was identified as having a competitive advantage due to the organization of it's supply chain
Walmart
Which company in the video was identified as having a competitive advantage due to the organization of it's supply chain.
Walmart
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
An _______ is calculated by subtracting the firm's costs from its total revenues, _______ .
accounting profit; excluding opportunity cost
In order to reduce the harmful affects of recession and carbon emissions, the government provided tax incentives for manufacturing firm's to ___________________ that provide alternative, more efficient methods of combining inputs to produce output.
acquire energy efficient production technologies
A business _______occurs when, for practical purposes, one firm purchases another.
acquisition
In order to determine ____________, the firm's total costs must be divided by the quantity of its output.
average cost
For a monopolistic firm, the demand for its product is
completely inelastic
The four-firm _______ measures the percentage share of the total sales in the industry that is accounted for by the largest four firms.
concentration ratio
The concept of restrictive practices in the U.S. market economy is _______.
continually evolving
Regulations that permit a regulated firm to cover its costs and to make a normal level of profit are commonly referred to as
cost-plus regulation
Which of the following falls outside of the classification of business expenses that fall into the category of fixed costs?
costs incurred in the act of producing
Which of the following falls outside of the classification of business expenditures that fall into the category of variable costs?
costs of research and development
It is said that in a perfectly competitive market, raising the price of a firm's product from the prevailing market price of $179.00 to $199.00, _____.
could likely result in a notable loss of sales to competitors
It is said that in a perfectly competitive market, raising the price of a firm's product from 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
In microeconomics, the term ___________________ is synonymous with decreasing returns of scale.
diseconomies of scale
If a solar panel manufacturer wants to look at its total costs of production in the short run, which of the following would provide a useful starting point?
divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be
According to the definition of profit, if a profit-maximizing firm will always attempt to produce its desired level of output at the lowest possible cost, then it will
do so regardless of what type of competition exists in a market.
The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls.
economies of scale
In order to calculate marginal cost, the change in ______________ is divided by the amount of change in quantity.
either total cost or variable cost
In the video, according to Adam Smith, monopoly market power will result in ____.
elimination of the invisible hand of competition.
An agreement between a manufacturer and a distributor stipulating that a dealer will only distribute that manufacturer's products would be classified as a form of
exclusive dealing.
The term "constant returns to scale" describes a situation where
expanding all inputs does not change the average cost of production
In order to analyze the effects of a particular business merger, economists typically measure whether the competitive change has
helped consumers. b. hurt consumers. c. made much difference. d. all of the above.
Markets that are best served by a natural monopoly are markets were the cost structure of production is dominated by _____.
high fixed cost
The economies-of-scale curve is a long-run average cost curve, because
it allows all factors of production to change.
. In the _______ , the perfectly competitive firm will react to profits by _______ .
long run; increasing its production
If marginal cost is rising in a competitive firm's short-run production process and its average variable cost is falling as output is increased, then
marginal cost is above average variable cost.
Under perfect competition, any profit-maximizing producer faces a market price equal to its
marginal costs
The term _______refers to the percentage share of a firm's total sales in the market.
market share
The Herfindahl-hirschman index is calculated by taking _______, squaring it, and adding them up to get a total.
market share of each firm in the industry
I'maGoldMiner has benefited from a record rise in gold prices in the global commodities market. While the price of its output is highly influenced by market speculation, if it wants to increase production to take advantage of the current profit-maximizing opportunity, the company
must accept market price for its physical capital inputs.
What role does the US government play with respect to market competition?
policing anticompetitive behavior and prohibiting contracts that restrict competition
If a perfectly competitive firm is a price taker, then
pressure from competing firms will force acceptance of the prevailing market price.
When the regulator sets a price that a firm cannot exceed over the next few years, the regulator is enforcing
price cap regulation
The term _______ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.
price taker
Why would labor be treated as a variable cost?
producing larger quantities of a good or service generally requires more workers
A monopolist is able to maximize its profits by
producing output where MR = MC and charging a price along the demand curve.
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 _______ , if profits are not possible, the perfectly competitive firm will seek out the quantity of output where _______ .
short run; losses are smallest
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
For a perfectly competitive firm, the marginal cost curve is identical to the firm's _______ .
supply curve
If two companies are seeking regulatory approval to merge their respective businesses, which of the following will most likely be the focus of the arguments that they will present in favor of the merger?
the new firm will produce more efficiently and all of the above
Refer to the diagram above. Based on the information illustrated in the graph, which of the following is correct?
the transition point between where MC is pulling down and pulling up AC always occurs at the minimum point of the AC curve
Antitrust law includes specific rules against restrictive practices in particular because
their effects can reduce competition.
A manufacturer that only allows a consumer to purchase one product if they also buy another product is using _______to increase its profits.
tie-in sales
When a firm pursues a predatory pricing strategy, it does so
to maximize profits in the long run.
A minimum resale price maintenance agreement requires a dealer who buys from a manufacturer _______.
to sell for at least a certain minimum price
In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice?
what quantity to produce