Econ test 2, chapter 5, 7,8,9,12

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Refer to Figure 22.3 for a perfectly competitive firm. If the market price is $23,

The firm will have above-normal profits.

The short-run production function shows how output changes when

The quantity of labor changes.

In economics, the long run is considered to be

The time period when all costs are variable.

Diseconomies of scale are reflected in

The upward-sloping segment of the long-run average total cost curve.

Refer to Figure 23.1 for a perfectly competitive firm. This firm should shut down in the short run if the market price is below

$5.

Which of the following represents the change in total cost that results from a one-unit increase in production?

Marginal cost.

Total utility is maximized when

Marginal utility is zero.

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

Sixth worker.

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

$80.00.

Refer to Figure 19.2. The total utility of two apples is

11 utils.

(b) At that equilibrium, what is Price?,Output?,Total Profit?

12,6,24

In Table 19.3, what is the marginal utility of the fifth unit of cola?

12.

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

12.0 units per day.

Refer to Table 19.3. If Michael has $40 to spend on cola and pretzels, what is his maximum utility possible?

174.

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

200 units.

Refer to Figure 22.3 for a perfectly competitive firm. At a market price of $23, total profits are maximized at an output of

39.

Refer to Table 19.1. What is Josh's total utility from consuming the third slice of pizza?

54 utils.

In Table 19.2, the marginal utility of the third unit is

6.

n Table 19.3, what is the total utility of two units of cola?

72.

In long-run equilibrium, what is Price?Output?Total profit?

9,5,0

The shutdown point occurs where price is below the minimum of

AVC.

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

Brand loyalty.

Sellers can gain profits from price discrimination because

Charging different prices based on willingness to pay can increase revenues without increasing costs.

What is the four-firm concentration ratio in an industry with the following market shares?

Concentration ratio:

The benefit that consumers get when they buy goods at the equilibrium price but were willing to pay more is called

Consumer surplus.

Graphically, as a consumer buys more of a good, the marginal utility line will

Continuously decline if diminishing returns are present. Correct

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

D

The demand curve faced by a monopolistically competitive firm is

Downward-sloping.

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.

When the size of a factory (and all its associated inputs) doubles and, as a result, output more than doubles,

Economies of scale must exist.

As an In and Out Burger restaurant increases the number of employees for a specific restaurant,

Efficiency will suffer as the restaurant becomes too crowded with employees.

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

Equilibrium price will rise as firms exit.

Product differentiation refers to

Features that make one product appear different from competing products in the same 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.

The demand curve for each perfectly competitive firm is

Horizontal.

The short run is the time period

In which some costs are fixed.

Economic cost

Includes both implicit and explicit costs.

A successful advertising campaign will

Increase the demand for the advertised good.

The exit of firms from a market, ceteris paribus,

Increases the equilibrium price in the market.

Monopolistic competition results in allocative

Inefficiency and productive inefficiency.

Marginal cost

Is the change in total cost from producing one additional unit of output.

If an individual demands a good, it means that he or she

Is willing and able to purchase the good at some price.

Refer to Figure 26.2 for a monopolistically competitive firm. At the profit-maximizing output and price, this firm is experiencing economic

Losses but should keep producing in the short run

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

Maximizes total profit.

A production function shows the

Maximum output that can be produced with varying combinations of factor inputs.

Which of the following market structures will have only normal profit in the long run?

Monopolistic competition.

Which type of firm engages in nonprice competition?

Monopolistically competitive firms.

Refer to Figure 26.4 for a monopolistically competitive firm. In the long run this firm will charge a price of ________ and produce an output of _______.

P4; Q3

Which of the following market structures will have higher output in the long run than monopolistic competition, ceteris paribus?

Perfect competition

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.

Refer to Figure 26.1. The output that maximizes production efficiency for this firm is

Q3.

A monopolistically competitive industry is characterized by ________ concentration ratios and ________ entry barriers.

low; low

Suppose the typical catfish farmer was incurring an economic loss.(a) What price level illustrates these losses on the firm in the above diagram?

p1

(c) What price would prevail in long-term equilibrium?

p2

Brand loyalty makes the demand curve facing the monopolistically competitive firm less price-elastic.

true

Refer to Figure 21.5. Economies of scale occur in the following range of factory sizes

#1 to #3.

The marginal cost between 20 and 30 units of output in Table 21.2 is

$1.80.

The marginal cost of the fourth unit of output in Table 21.4 is

$20.00.

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

$288.00.

What is the total cost of 120 units in Figure 21.2?

$34,560.

Refer to the data in Figure 22.1. The total fixed costs for this firm are approximately

$50.

Which of the following are factors of production?

Land, labor, capital, and entrepreneurship.

(b) What forces would raise the price?

An increase in market demand or a decrease in market supply

If there are many firms in an industry producing goods that are similar but slightly different, this is an example of

Monopolistic competition.

Which of the following is most likely a fixed cost?

The rent for a factory.

Explicit costs

Are the sum of actual monetary payments made for resources used to produce a good.

Which of the following costs do not change when output changes in the short run?

Fixed costs.

Profit is

The difference between total revenue and total cost.

If marginal utility is negative, then

Total utility will decrease with additional consumption.

Firms in a monopolistically competitive market will

Use the profit-maximizing rule MC = MR.

If economic profits are earned in a competitive market, then over time

Additional firms will enter the market.

The $600 paid in property taxes counts as

An explicit cost.

Assuming the entrepreneur does not pay herself, the $1,000 she could earn as an employee elsewhere is considered

An implicit cost.

The law of diminishing marginal utility states that

As a consumer enjoys successive units of a good, eventually marginal utility will fall. Correct

The perfectly competitive market structure includes all of the following except

Large advertising budgets.

The additional pleasure or satisfaction from a good declines as more of it is consumed in a given period. This is the definition of the

Law of diminishing marginal utility.

The shape of the marginal cost curve reflects the

Law of diminishing returns.

Brand loyalty usually makes the demand curve for a product

Less price-elastic.

Short-run profits are maximized at the rate of output where

Marginal revenue is equal to marginal cost.

(a) Identify the short-run equilibrium of a monopolistically competitive firm.

Points A and A'

c) Identify the long-run equilibrium of the same firm.

Points B and B'

A firm's total revenue can be determined by

Price times quantity.

Refer to Figure 23.1. If the market price equaled $10, in the short run this firm should

Produce with an economic loss

Which of the following most characterizes monopolistic competition?

Product differentiation.

Economists assume the principal motivation of producers is

Profit.

If new firms enter a monopolistically competitive market, the demand curves for the existing firms will

Shift to the left.

The market price for T-shirts sold in a perfectly competitive market is determined by

Supply and demand.

Marginal utility is

The additional utility a consumer enjoys from the consumption of one more unit of a good. Correct

A monopoly occurs when

There is only one producer of a good or service. Correct

Average total cost is equal to

Total cost divided by quantity produced.

The difference between the total revenue and total cost curves at a given output is equal to

Total profit.

A firm maximizes total profit when

Total revenue exceeds total cost by the greatest amount.

Refer to Table 19.3. Suppose Michael has $28 to spend on cola and pretzels. What combination should he purchase in order to maximize his utility?

Two colas and three pretzels

At any given rate of output, the difference between total cost and fixed cost is

Variable cost.

Which of the following is characteristic of a perfectly competitive market?

Zero economic profit in the long run.

At 4 units of output in Table 21.4, the total variable cost is

$62.00.

In which of the following types of markets does a single firm have the most market power?

Monopoly.

A concentration ratio measures the

Proportion of industry output produced by the largest firms

The entry of firms into a market

Reduces the profits of existing firms in the market.

Any point on the budget constraint

Represent a combination of two goods that are affordable.

Utility refers to the

Satisfaction obtained from a good or service. Correct

Price discrimination occurs when

Sellers charge two separate prices for the same product to two different groups. Correct

Marginal cost is equal to

The change in total costs divided by the change in quantity produced.

The main difference between perfect competition and monopolistic competition is

The degree of product differentiation.

Refer to Figure 22.3 for a perfectly competitive firm. Which of the following statements is true for this firm between the prices of $10 and $15?

The firm is experiencing economic losses but should continue to produce.

A perfectly competitive firm is a price taker because

The price of the product is determined by many buyers and sellers.

Total utility is

The sum of the marginal utilities from the consumption of good.


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