Econ Quizzes 17-22
the total product curve shows the relationship between total product and ...
the quantity of labor
an increase in the price of labor (a variable resource) shifts ...
the variable cost curve upward but leaves the fixed cost curves unchanged
price discrimination is possible, in part, because ...
the willingness to pay can vary among groups of buyers
a single-price monopoly faces a linear demand curve. If the marginal revenue for the second unit is $20, then the marginal revenue for the ...
third is less than $20
for a single-price monopolist, why is marginal revenue less than price?
to sell another unit, the price must be lowered
the short run is a time period that is ...
too short to change the size of the firm's plant
the vertical distance between total cost curve and total variable cost curve is equal to ...
total fixed cost
what cost can be positive when output is zero?
total fixed cost
an insurance agent rents a building and has a three-year lease. An increase in the rent for the building increases the agent's ...
total fixed cost and average fixed cost
average total cost equals ...
total fixed cost divided by output
the marginal product of labor is the change in ...
total output from employing one more worker
average product is equal to ...
total product ÷ quantity of labor
average variable cost equals ...
total variable cost divided by output
marginal cost equals
total variable cost divided by total output
Chuck owns a factory that produces leather footballs. His total fixed cost equaled $86,000 last year. His total cost equaled $286,000 last year. Hence Chuck's ...
total variable cost equaled $200,000
because the amount of labor a firm employs can be changed, the cost of labor is known as a ...
variable cost
the law of decreasing returns states that as a firm uses more of a ...
variable input, with a given quantity of fixed inputs, the marginal product of the variable input eventually decreases
to maximize its profit, in the short run a perfectly competitive firm decides ...
what quantity of output to product
what is true about marginal and average products?
when the marginal product exceeds the average product, the average product must be increasing
if a firm in a perfectly competitive market faces an equilibrium price of $5, its marginal revenue ...
will also be $5
when used with a natural monopoly, an average cost pricing rule results in ...
zero economic profit for the firm
Austin owns the Fruit Bowl food truck. What would be the short run decisions for Austin?
how much fruit to buy and how many workers to hire
a single-price monopoly must ...
lower the price for all customers if it wants to increase its sales
compared to setting a single price, if a firm can price-discriminate it ...
makes a larger economic profit
if a perfectly competitive firm's average total cost is less than the price, then the firm ...
makes an economic profit
if total fixed cost increases, what will not change?
marginal cost
if another worker is hired with a marginal product greater than the previously hired worker, what will be true?
marginal cost will decrease
the average product is greatest in the short run when the ...
marginal product is equal to the average product
if marginal cost increases when output increases, then ...
marginal product must decrease when output increases
a firm maximizes its profit by producing the amount of output such that ...
marginal revenue equals marginal cost
for a perfectly competitive firm, profit maximization occurs when output is such that ...
marginal revenue equals marginal cost
the maximum profit for a single-price monopoly is found when the firm produces the level of output so that ...
marginal revenue equals marginal cost
the makers of the movie Titanic have some monopoly power over this film because the ...
movie is protected by copyright law
a monopoly ...
must determine the price it will charge
if total revenue falls when output increases, marginal revenue is ...
negative
a natural monopoly exists when ...
one firm can supply an entire market at a lower average cost than can two or more firms
we define a monopoly as a market with ...
one supplier with barriers to entry
in which market structure do firms exist in very large numbers, each firm produces an identical product, and there freedom of entry and exit?
only perfect competition
to encourage invention and innovation, the government provides ...
patents
in order for a hotel to successfully price discriminate so that senior citizens are given discount, the hotel must be able to ...
prevent senior citizens from reselling their rooms to younger customers
a marginal cost pricing rule sets marginal cost equal to ...
price
an airline company ...
price discriminates by charging higher prices to business travelers
in a perfectly competitive market, the market price is $23. At the current level of output, a firm has a marginal cost of $28. What should the firm do?
produce less output to make more profit
a monopoly creates a deadweight loss because the monopoly ...
produces less than the efficient quantity
... natural monopolies is a commonly used, potential solution to the problems presented by natural monopolies
regulating
the social interest theory of regulation assumes that ...
regulation seeks an efficient use of resources
a perfectly competitive firm can ...
sell all of its output at the prevailing market price
a price-discriminating monopoly ...
sells a larger quantity than it would if it were a single-price monopoly
a price-discriminating monopoly is a monopoly that ...
sells different units of a good or service at different prices
a single-price monopoly ...
sets a single price for all consumers
suppose that marginal revenue for a perfectly competitive firm is $20. When the firm produces 10 units, its marginal cost is $20, its average total cost is $22, and its average variable cost is $17. Then to maximize its profit in the short run, the firm ...
should stay open and incur an economic loss of $20.
moving along the total product curve, what is held constant?
technology
what explains why the marginal cost pricing rule results in an economic loss for a natural monopoly?
the ATC curve is downward sloping throughout the relevant range, therefore the MC is lower than the ATC
the marginal product of labor is ...
the change in total product divided by the increase in labor
for a monopoly, marginal revenue is equal to ...
the change in total revenue brought about by a one-unit increase in quantity sold
marginal revenue is ...
the change in total revenue from a one-unit increase in the quantity sold
what are the fixed inputs for a hospital?
the emergency room, intensive care unit, and other facilities
who receives benefits if regulation works according to social interest theory?
the entire economy
a large number of sellers all selling an identical product implies what?
the inability of any seller to change the price of the product
a perfectly competitive market arises when
the market demand is very large relative to the output of one seller
the long run is defined as ...
the period of time when all resources are variable
the total product is 10 units. The average total cost is $30 and the average fixed cost is $10. What is the amount of the total variable cost?
$200
A single-price monopoly can sell 2 units for $8.50 per unit. In order to sell 3 units, the price must be $8.00 per unit. The marginal revenue from selling the third unit is ...
$7
At the Punjab Bakery, two workers can decorate 14 cakes in an hour and three workers can decorate 18 cakes in an hour. The marginal product of the third worker is ...
4 cakes, and the average product for three workers is 6 cakes
a price-discriminating monopoly charges ...
a different price to different types of buyers for the same product, even though there are no differences in costs
if a natural monopoly is regulated using ...
a marginal cost pricing rule, the firm incurs an economic loss
your local water company is considered ...
a natural monopoly and will be regulated
when economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than two or more firms ...
a natural monopoly develops
a monopoly market has ...
a single firm
a major characteristic of monopoly is ...
a single seller of a product
a monopoly is ...
able to set the price for its product
decreasing marginal returns occur in the short run as more labor is hired to work in a fixed sized plant because ...
adding more workers exhausts the possible gains from specialization
in the long run ...
all resources are variable
what describes a barrier to entry?
anything that protects a firm from the arrival of new competitors
increasing marginal returns to labor ...
are the result of specialization and division of labor in the production process
what always decreases when output increases?
average fixed cost
for a natural monopoly to cover its total cost, its price must equal its
average total cost
a perfectly competitive firm will shut down when the price is just below the minimum point on the ...
average variable cost curve
a perfectly competitive firm should shut down in the short-run if price falls below the minimum of ...
average variable costs
to be able to price discriminate, a firm must ...
be able to identify and separate different types of buyers
in contrast to competitive firms, single-price monopolies ...
can make an economic profit indefinitely
in the short run, a perfectly competitive firm ...
can possibly make an economic profit or possibly incur an economic loss
what is an example of a two-part tariff?
charging a hookup fee plus a monthly charge equal to marginal cost
with price discrimination, a monopoly ...
converts consumer surplus into economic profit
Suppose that a perfectly competitive firm's marginal revenue equals $12 when it sells 10 units of output. If the marginal cost of producing the 10th unit is $14, to maximize its profit the firm should ...
decrease its output
as a typical firm increases its output, its marginal cost ...
decreases at first and then increases
when the marginal product of an additional worker is less than the marginal product of the previous worker, there are ... returns to labor
decreasing marginal
in a graph of a typical firm's AFC, ATC, and AVC curves, the ...
distance between the ATC curve and the AVC curve equals the AFC
what is a good example of a natural monopoly?
distribution of electricty
the demand curve for a monopoly is ...
downward sloping
the short run is the time frame ...
during which the quantities of some resources are fixed
if the market price of a product is $14 and all sellers are price takers, then what is true?
each seller's total revenue line is graphed as an upward-sloping straight line
if a firm successfully price discriminates, it increases ...
economic profit
a perfectly competitive firm definitely makes an economic profit in the short run if price is ...
equal to marginal cost
in the short run, a firm cannot change the amount of capital it uses. Therefore the cost of capital is a ...
fixed cost
for a single-price monopoly, price is ...
greater than marginal revenue
the good produced by a monopoly ...
has no close substitutes
when the slope of the total product curve is steep, the marginal product is ...
high
the marginal revenue curve for a perfectly competitive firm is ...
horizontal
the U-shape of the average variable, average total, and marginal cost curves reflects ...
increasing and decreasing marginal returns
if a firm shuts down, it ...
incurs an economic loss equal to its total fixed cost
if the market price is $50 per unit for a good produced in a perfectly competitive market and the firm's average total cost is $52, then the firm ...
incurs an economic loss of $2 per unit
a natural monopoly ...
is a firm that can supply the market at a lower average total cost than two or more firms
if a perfectly competitive firm finds that the price exceeds its ATC, then the firm ...
is making an economic profit
Peter's Pencils is a perfectly competitive company producing pencils. Suppose Peter is producing 1,000 pencils an hour. If the total cost of 1,000 pencils is $500, the market price per pencil is $2, and the marginal cost is $2, then Peter ...
is maximizing his profit and is making an economic profit
when a firm is able to engage in perfect price discrimination, its marginal revenue curve ...
is the same as its demand curve
with perfect price discrimination, the level of output ...
is the same as the amount produced in a perfectly competitive market
we know that a perfectly competitive firm is a price taker because ...
its demand curve is horizontal
to produce more output in the short run, a firm must employ more of ...
its variable resources
which firm is most likely to be a monopoly?
local distributor of natural gas