economics test 3

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A barrier to entry is A) a natural or legal impediment that makes it difficult for new firms to enter a market. B) a necessary condition for perfect competition. C) the result of highly elastic demand. D) a brick wall that a firm places around its corporate headquarters.

A monopoly has two key features, which are ________. A) barriers to entry and no close substitutes B) franchises and barriers to entry C) barriers to entry and close substitutes D) close substitutes and no barriers to entry

A perfectly competitive firm will have an economic profit of zero if, at its profit-maximizing output, its marginal revenue equals its A) average total cost. B) marginal cost. C) average variable cost. D) average fixed cost.

A public franchise is A) an exclusive right granted to a firm to supply a good or service. B) a government issued license required to practice a profession. C) an exclusive right granted to an inventor of a product. D) a unique source of raw materials.

For a monopolist, on the inelastic range of its demand, A) marginal revenue is negative. B) marginal revenue is positive. C) marginal revenue is equal to zero. D) total revenue is maximized.

For a perfectly competitive firm, in the long-run equilibrium, A) P = MC= ATC = MR. B) MR= MC= AFC. C) MR= P = ATC = AFC. D) P = MC> ATC.

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Should Homer's exit the market in the long run? A) Yes, because he is incurring an economic loss. B) Yes, because all costs are fixed in the long run. C) No, because he is making an economic profit. D) No, because all costs are variable in the long run.

If a perfectly competitive market is in long-run equilibrium and there is a permanent decrease in demand, then A) some firms will incur economic losses. B) firms are no longer maximizing profits. C) some firms must immediately exit. D) each firm must produce less output in the new long run equilibrium and earn less economic profit.

If perfectly competitive firms exit a market, the A) market supply curve shifts leftward. B) price of the good or service falls. C) profits of the remaining firms decrease. D) output of the industry increases.

If the price elasticity of demand is greater than 1, a monopoly's A) total revenue increases when the firm lowers its price. B) total revenue decreases when the firm lowers its price. C) marginal revenue is negative. D) marginal revenue is zero.

In a perfectly competitive market in the short run, as the market demand increases, the firms ________ their output and their economic profit ________. A) increase; increases B) increase; decreases C) decrease; decreases D) decrease; increases

In the monopoly, the firm's marginal revenue curve is ________, while in a perfectly competitive market, each firm's marginal revenue curve is ________ . A) downward sloping; horizontal B) horizontal; downward sloping C) upward sloping; horizontal D) downward sloping; upward sloping

In the short run, the firm makes zero economic profit when the price is ________ minimum average total cost, makes an economic profit when the price is ________ minimum average total cost, and incurs an economic loss when the price is ________ minimum average total cost. A) equal to; higher than; lower than B) equal to; lower than; higher than C) higher than; equal to; lower than D) lower than; equal to; higher than

The average product of labor is equal to the A) total product divided by the total number of workers hired. B) total number of workers hired divided by the total product. C) slope of the marginal product of labor curve. D) Both answers B and C are correct.

The demand curve facing the monopolist is A) the same as the market demand curve. B) more elastic than the market demand curve. C) less elastic than the market demand curve. D) upward sloping.

The marginal revenue curve for a single-price monopoly A) lies below its demand curve. B) coincides with its demand curve. C) lies above its demand curve. D) is horizontal.

Which of the following is a barrier to entry for a monopoly? A) a patent B) severe diseconomies of scale C) close substitutes for the good or service exist D) All of the above answers are correct.

A company could produce 99 units of a good for $316 or produce 100 units of the same good for $320. The marginal cost of the 100th unit A) is $3.20. B) is $4.00. C) is $320. D) cannot be calculated with this information.

A firm's average total cost is $100, its average variable cost is $90, and its total fixed cost is $1,000. Its output is A) less than 70 units. B) between 70 and 120 units. C) between 120 and 170 units. D) more than 170 units.

A firm's shutdown point is the quantity and price at which the firm's total revenue just equals its A) total cost. B) total variable cost. C) total fixed cost. D) marginal cost.

A perfectly competitive firm is definitely making an economic profit when A) MR< MC. B) P > ATC. C) P < ATC. D) P > AVC.

After constructing a new factory, the cost of building the factory is a A) past cost. B) sunk cost. C) variable cost. D) None of the above answers are correct.

Archibald's Tattoos is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price of a tattoo is $17.50, what is the firm's economic profit? A) zero B) $2.50 per hour C) $12.50 per hour D) -$10.00 per hour

Based on the above figure of the costs at Barney's Bagel Bakery, at which level of output will diminishing marginal returns first occur? A) at 1 bagel B) at 500 bagels C) at 2000 bagels D) at 3000 bagels

Based on the above figure of the costs at Barney's Bagel Bakery, at which of the following levels of output does the marginal product of labor equal the average product of labor? A) at 500 bagels B) at 2000 bagels C) at 3000 bagels D) None of the above because the marginal and average products of labor can never be equal.

Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his total cost will be A) $0. B) $1,000. C) $1,200. D) $4,000.

Based on the table above which shows Chip's costs, if rice sells for $600 a ton, Chip's profit-maximizing output is A) less than one ton. B) between two and three tons. C) between three and four tons. D) between one and two tons.

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. What is Ernie's average total cost? A) $12 B) $10 C) $8 D) $2

For a single-price monopolist, price is ________ marginal revenue. A) less than B) greater than C) equal to D) less than or equal to but never more than

If the government grants a firm a public franchise to supply coal, a monopoly is created by A) a natural barrier to entry. B) a legal barrier to entry. C) price discrimination. D) All of the above answers are correct.

In a perfectly competitive market, which of the following will increase the economic profit the firms make in the short run? A) a decrease in market demand B) an increase in market demand C) an increase in labor costs D) an increase in the number of firms

In perfect competition, a firm that maximizes its economic profit will sell its good at a price that is A) below the market price. B) at the market price. C) above the market price. D) below the market price if its supply curve is inelastic and above the market price if its supply curve is elastic.

In the above figure, the marginal cost of the last unit produced by the profit maximizing firm is A) $5. B) $10. C) $15. D) $20.

In the above table, the average product is less than the marginal product A) when the first worker is hired. B) when the second worker is hired. C) when the third worker is hired. D) for the entire range of output given.

In the short run, an increase in demand for a good that is sold in a perfectly competitive market A) increases the number of firms in the market. B) increases the economic profits of existing firms in the market. C) has no effect on the price. D) causes more firms to shut down.

The monopoly illustrated in the figure above is unregulated and charges a single price. The deadweight loss created by the monopoly is A) $0. B) $22.50. C) $45.00. D) $90.00.

The short-run supply curve for a perfectly competitive firm is its A) marginal cost curve above the horizontal axis. B) marginal cost curve above its shutdown point. C) average cost curve above the horizontal axis. D) average cost curve above its shutdown point.

The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm increases its output from 2 pounds of cookies to 3 pounds, the marginal cost is ________ per pound of cookies. A) $11 B) $15 C) $24 D) $39

A firm's average variable cost is $90, its total fixed cost is $10,000, and its output is 1,000 units. Its total cost is A) less than $85,000. B) between $85,000 and $95,000. C) between $95,000 and $105,000. D) more than $105,000.

A natural monopoly A) is not protected by any barrier to entry. B) exists because of legal barriers to entry. C) is an industry in which economies of scale exist at the level of output where the market demand curve intersects the long-run average cost curve. D) is an industry where two or more smaller firms can supply the market at a lower cost than one big firm could.

A perfectly competitive firm initially is earning zero economic profit. Then, a decrease in demand for the firm's product occurs. Of the following, in the long run which action listed below is the firm mostlikely to take?A) Increase the quantity it produces. B) Increase its advertising to increase the demand for its product. C) Exit the market. D) Increase the size of its plant.

A single-price monopolist will maximize profit by producing so that marginal revenue A) exceeds marginal cost. B) is less than marginal cost. C) equals marginal cost. D) equals price.

An example of a monopoly is A) a big city restaurant. B) the stock market. C) the only veterinarian in an isolated farm community. D) a large hospital in a big city.

Because of a decrease in the wage rate it must pay, a perfectly competitive firm's marginal costs decrease but its demand curve stays the same. As a result, the firm A) decreases the amount of output it produces and raises its price. B) increases the amount of output it produces and lowers it price. C) increases the amount of output it produces and does not change its price. D) decreases the amount of output it produces and lowers its price.

Compared to a single-price monopoly, a perfectly competitive market with the same costs produces ________ output and has a ________ price. A) less; lower B) less; higher C) more; lower D) more; higher

In perfect competition, each firm ________. A) can influence the price that it charges B) produces as much as it can C) is a price taker D) faces a perfectly inelastic demand for its product

In perfect competition, the marginal revenue of an individual firm A) is zero. B) is positive but less than the price of the product. C) equals the price of the product. D) exceeds the price of the product.

In the long run, perfectly competitive firms earn just enough revenue to A) pay all fixed costs. B) pay all accounting costs. C) pay all opportunity costs. D) attract entry.

In the short run, A) all factors of production are fixed. B) labor usage must remain fixed. C) a firm's plant is fixed. D) no factors of production are fixed.

In the short run, a perfectly competitive firm's economic profits A) must equal zero, that is, the firm earns a normal profit. B) must be positive. C) might be positive, negative (an economic loss), or zero (a normal profit). D) must be negative, that is the firm must incur an economic loss.

When Sidney's Sweaters, Inc. makes exactly zero economic profit, Sidney, the owner, A) is taking a loss. B) will shut down in the short run. C) makes an income equal to his best alternative forgone income. D) will boost output.

Based on the table above which shows Chip's costs, if rice sells for $600 a ton, Chip A) makes an economic profit and should stay open in the short run. B) makes an economic profit, but should shut down in the short run. C) incurs an economic loss, but should stay open in the short run. D) incurs an economic loss and should shut down in the short run.

Because the demand for a perfectly competitive firm's product is perfectly elastic, marginal revenue is equal to A) one. B) zero. C) the price of the product. D) negative one.

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. What is Ernie's total variable cost? A) $2,400 B) $2,000 C) $1,600 D) $800

For a perfectly competitive firm, as its output increases its marginal revenue ________ and its marginal cost ________. A) changes; changes B) changes; does not change C) does not change; changes D) does not change; does not change

If the price exceeds the average variable cost, by producing the level of output such that marginal revenue equals marginal cost, the firm ensures that it will A) earn an economic profit. B) not suffer any losses. C) earn the largest profit possible. D) survive in the long run.

In perfect competition, an individual firm A) sets the price and determines the quantity it sells in the marketplace .B) sets the price but does not determine the quantity it sells in the marketplace. C) determines the quantity it sells in the marketplace but has no influence over its price. D) can not affect its price nor determine the quantity it sells in the marketplace.

In perfect competition, the market demand for the good ________ perfectly elastic and the demand for the output of one firm ________ perfectly elastic. A) is; is B) is; is not C) is not; is D) is not; is not

In the above table, if the firm produces 2 units of output, it will A) make an economic profit of $9. B) make an economic profit of $60. C) incur an economic loss of $9. D) incur an economic loss of $60.

Marginal revenue is defined as A) the value of a firm's sales. B) the total revenue from the total amount the firm sells. C) the change in total revenue that results from a one-unit increase in the quantity sold. D) total revenue divided by the total quantity sold.

In the above table, if the quantity sold by the firm rises from 5 to 6, its marginal revenue is A) $15. B) $30. C) $75. D) $90.

In the above table, if the firm sells 5 units of output, its total revenue is A) $15. B) $30. C) $75. D) $90.

The table above shows the total cost incurred by Sue's Coat Shop, a perfectly competitive firm. If the market price of a coat is $285, Sue's will maximize economic profit by selling ________ coats a day. A) 7 B) 11 C) 8 D) 9

At a firm's break-even point, its A) total revenue equals its total opportunity cost. B) marginal revenue exceeds its marginal cost. C) marginal revenue equals its average variable cost. D) marginal revenue equals its average fixed cost.

In a perfectly competitive market, an increase in market demand A) raises the price in the short run and attracts new firms in the long run. B) raises the price in the short run and the long run. C) lowers the price in the short run and in the long run. D) has no effect on the price in either the short run or the long run because the firms are price takers.

When Dominant Pizza is willing to sell a pizza to a student who lives on-campus at a lower price than it sells the identical pizza to a student who lives a block away from the campus, the pizza firm is ________. A) practicing price discrimination B) unfair C) incurring a loss on on-campus sales D) eliminating all competition

Which of the following is not necessarily true for a profit-maximizing single-price monopolist? A) P > ATC B) P > MC C) P > MR D) MR= MC

A natural monopoly is defined as A) a market in which competition and entry are restricted by the granting of a government license. B) an industry in which economies of scale allow one firm to supply the entire market at the lowest possible cost. C) a market in which competition and entry are restricted by the granting of a patent. D) any market where one firm constitutes the entire industry.

A single-price monopoly A) charges all consumers the lowest price that they want to pay for each unit purchased. B) produces less output than it would if it could price discriminate. C) eliminates all the consumer surplus. D) creates a smaller deadweight loss than it would if it could price discriminate.

A single-price monopoly is characterized by a marginal revenue curve that is A) upward sloping. B) downward sloping. C) horizontal. D) vertical.

Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 25th haircut? A) zero B) $5.00 C) $17.50 D) $50.00

Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 35th haircut? A) zero B) -$5.00 C) $5.00 D) $12.50

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Homer's economic profit is equal to A) -$16,000, that is, an economic loss of $16,000. B) -$9,000, that is, an economic loss of $9,000. C) +$9,000. D) +$12,000.

If a decrease in price decreases total revenue, then A) demand is elastic. B) demand is inelastic. C) demand is unit elastic. D) the law of demand is violated.

In the long run, a single-price monopolist will A) make zero economic profit. B) be able to continue to make an economic profit as long as the market remains a monopoly. C) end up being regulated by the government because it is making short-run economic profits. D) Both answers A and C are correct.

In the long-run equilibrium, perfectly competitive firms make zero economic profit because of A) government regulations. B) the ability of firms to enter and exit. C) inefficient production processes. D) high fixed costs.

Paul runs a shop that sells printers. Paul is a perfect competitor and can sell each printer for a price of $300. The marginal cost of selling one printer a day is $200; the marginal cost of selling a second printer is $250; and the marginal cost of selling a third printer is $350. To maximize his profit, Paul should sell A) one printer a day. B) two printers a day. C) three printers a day. D) more than three printers a day.

Roxie's Movie Theatre is the only one in town. The table above gives the demand schedule for movies. If Roxie's is a single-price monopoly and the marginal cost of a movie is $6, Roxie's will charge ________ a movie and will sell ________ movie tickets a week. A) $15; 100 B) $12; 200 C) $6; 400 D) $9; 300

The short-run market supply curve for a perfectly competitive market is obtained by summing the part of each firm's A) AVC curve that lies above its MCcurve. B) MCcurve that lies above its AVC curve. C) AVC curve that lies below the MC curve. D) MCcurve that lies below the AVC curve.

Today, firms in a perfectly competitive market are making an economic profit. In the long run, firms will ________ the market until all firms in the market are ________. A) exit; covering only their total fixed costs B) enter; making zero economic profit C) exit; producing at the minimum point on their long-run average cost curve D) enter; making zero normal profit

A cost that has already been made and cannot be recovered is called a A) variable cost. B) fixed cost. C) sunk cost. D) marginal cost.

A firm's average total cost is $80, its average variable cost is $75, and its output is 50 units. Its total fixed cost is A) less than $100. B) between $100 and $200. C) between $200 and $300. D) more than $300.

A firm's average total cost is $80, its fixed cost is $1000, and its output is 100 units. Its average variable cost A) is less than $40. B) is between $40 and $60. C) is more than $60. D) cannot be determined without more information.

A market is perfectly competitive if A) each firm in it can influence the price of its product. B) there are many firms in it, each selling a slightly different product. C) there are many firms in it, each selling an identical product. D) there are few firms in the market.

An unregulated, single-price monopoly is shown in the figure above. If fixed cost is $20, the monopoly's total costs when it is maximizing its profit will be A) $30. B) $40. C) $80 D) $140.

An unregulated, single-price monopoly is shown in the figure above. If fixed cost is $20, the monopoly's total economic profit when it is maximizing its profit will be A) negative. B) $0. C) $25. D) $50.

Dee's TV Repair is the only TV repair shop in a small town. Dee is a single-price monopolist. Based on the demand and cost information in the table above, what quantity of TV repairs should Dee undertake? A) 0 per week B) 10 per week C) 20 per week D) 30 per week

Firms that can price discriminate between customers do so to ________. A) increase consumer surplus B) increase employment C) increase their profit D) decrease the quantity they produce

For a monopoly, at the level of output where marginal revenue equals zero, then the A) firm earns no revenue. B) price elasticity of demand at this amount of output is zero. C) firm has maximized total revenue. D) firm is a price taker.

For prices above the minimum average variable cost, a perfectly competitive firm's supply curve is A) horizontal at the market price. B) vertical at zero output. C) the same as its marginal cost curve. D) the same as its average variable cost curve.

If firms in a perfectly competitive industry are making zero economic profit, then A) some of those firms will leave the industry, because firms cannot persistently go without making economic profit. B) new firms will enter the industry, because the new entrants would be ensured of doing as well as in their best foregone alternative. C) there is no incentive for either entry or exit. D) some of the firms will temporarily shut down.

If there are 1,000 rutabaga farms, all perfectly competitive, an increase in the price of fertilizer used for growing rutabagas will A) have no effect on the total quantity of rutabagas supplied, because no farm has enough market power to raise the price. B) have no effect on the total quantity of rutabagas supplied, because each farm's supply curve is a vertical line. C) decrease the total quantity of rutabagas supplied, because each farm's supply curve shifts leftward. D) reduce the total quantity of rutabagas supplied, because each farm's supply curve is a horizontal line and will shift upward.

Natural monopolies occur when there are A) large diseconomies of scale. B) external economies. C) large economies of scale. D) natural resources involved.

Suppose that a monopoly is currently producing the quantity at which marginal revenue is less than marginal cost. The monopoly can increase its profit by ________. A) shutting down B) lowering its price and increasing its output C) raising its price and decreasing its output D) lowering its price and decreasing its output

Suppose that newspaper companies are now required to use recycled paper, which is more expensive than new paper. Which of the following is most likely to result if the newspaper industry is highly competitive?A) The firms' costs rise, resulting in positive economic profit in the short run and, hence, the industry supply curve shifts rightward in the long run. B) The firms' costs rise, resulting in economic losses in the short run and, hence, the industry supply curve shifts rightward in the long run. C) The firms' costs rise, resulting in economic losses in the short run and, hence, the industry supply curve shifts leftward in the long run. D) The industry supply curve shifts leftward in the short run, causing permanent long-run economic losses.

The firms in a perfectly competitive are making an economic profit when new firms enter. The entry shifts the short-run market supply curve ________, the market price ________, and each firm's economic profit ________. A) leftward; rises; decreases B) rightward; rises; increases C) rightward; falls; decreases D) leftward; falls; decreases

A monopolist can make an economic profit in the long run because of A) the relatively elastic demand for its product. B) the relatively inelastic demand for its product. C) the firm's price setting behavior. D) barriers to entry.

A monopoly A) faces a perfectly elastic demand curve. B) does not need to take account of demand because it's the only seller. C) raises the price it can charge for its product by increasing the quantity sold. D) raises the price it can charge for its product by decreasing the quantity sold.

A monopoly that sells every unit of its output at the same price is a ________. A) unit-price monopoly B) legal monopoly C) natural monopoly D) single-price monopoly

A perfectly competitive firm is making an economic profit when A) its total revenue is greater than its total cost. B) the price is greater than the minimum of its average total cost. C) the price is greater than the minimum of its average variable cost. D) Both answers A and B are correct.

A single-price monopoly will set its price according to which of the following rules? A) P = MRand MR = MC B) P = MCwhere the MCcurve crosses the demand curve C) P = MRwhere the MRcurve crosses the demand curve D) None of the above answers is correct.

Dee's TV Repair is the only TV repair shop in a small town. Dee is a single-price monopolist. Based on the demand and cost information in the table above, what is the amount of economic profit made or loss incurred at the quantity of TV repairs that profits are maximized or losses minimized? A) -$400 B) $800 C) -$100 D) $200

Entry in a perfectly competitive market A) shifts the market supply curve rightward. B) decreases the market price. C) shifts the market supply curve leftward. D) Both answers A and B are correct.

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Should Homer's shut down in the short run? A) Yes, because he is incurring an economic loss. B) Yes, because he cannot cover all of his fixed costs. C) No, because is making positive economic profit. D) No, because he can cover all of his variable costs.

In the long run, for a perfectly competitive market, if economic profit is A) less than zero, then some firms will exit the market and the market supply curve will shift leftward. B) greater than zero, then some firms will enter the market and the market supply curve will shift rightward. C) equal to zero, then there is no entry or exit of firms into or out of the market. D) All of the above answers are correct.

New reports indicate that eating turnips helps people remain healthy. The news shifts the demand curve for turnips rightward. In response, new farms enter the turnip industry. During the period in which the new farms are entering, the price of a turnip ________ and the economic profit of each existing firm ________. A) rises; rises B) rises; falls C) falls; rises D) falls; falls

The apple market is perfectly competitive and is in long-run equilibrium. Now a disease kills 50 percent of the apple orchards. In the short run, the price of a bag of apples ________ and the remaining apple growers make ________ economic profit. In the long run, the ________. A) increases; zero; price of apples will return to their original level B) remains the same; zero; orchards will be replanted and growers will make normal profits C) increases; zero; orchards will be replanted and economic profit will return to zero D) increases; positive; orchards will be replanted and economic profit will return to zero

The unregulated, single-price monopoly shown in the figure above will sell A) less than 30 tickets. B) 30 tickets. C) 50 tickets. D) 100 tickets.

Which of the following is NOT a legal barrier to entry?A) public franchise B) government license C) patent D) innovation

perfectly competitive firm shuts down if the price of its product is A) greater than its minimum average variable cost. B) less than its minimum average variable cost. C) greater than its maximum variable cost. D) less than its minimum total cost.

Firms in perfectly competitive industries have a ________ individual demand curve when the price is on the vertical axis and the quantity is on the horizontal axis. The shape of the curve is result of the firm being a ________. A) horizontal; price taker B) downward sloping; price maker C) vertical; price taker D) downward sloping; price taker

In perfect competition, the product of a single firm A) has many perfect substitutes produced by other firms. B) has many perfect complements produced by other firms. C) is sold under many differing brand names. D) is sold to different customers at different prices.

In the above figure, the firm's total economic profit is equal to A) $60. B) $200. C) $150. D) MR- MC.

In the above table, if the quantity sold by the firm rises from 6 to 7, its marginal revenue is A) $15. B) $30. C) $90. D) $105.

In the above table, the firm A) must be in a perfectly competitive market because its marginal revenue is constant. B) must be in a perfectly competitive market because its marginal cost curve eventually rises. C) cannot be in a perfectly competitive market because its short-run economic profits are greater than zero. D) cannot be in a perfectly competitive market because its long-run economic profits are greater than zero.

In the above table, the marginal revenue from the fourth unit of output is A) $30. B) $147. C) $150. D) $180.

In the above table, the price of the product is A) $30. B) $147. C) $150. D) $180.

Perfect competition arises if the ________ efficient scale of a single producer is ________ relative to the demand for the good or service. A) minimum; small B) minimum; large C) maximum; small D) maximum; large

The above figure shows the costs at Barney's Bagel Bakery. For which of the following levels of output does the marginal product of labor exceed the average product of labor? A) at 1000 bagels daily B) at 2000 bagels daily C) at 3000 bagels daily D) all of the above

The above figure shows the costs at Barney's Bagel Bakery. Up to which level of output will increasing marginal returns in production be experienced at Barney's Bagel Bakery? A) up to 500 bagels B) up to 2000 bagels C) up to 3000 bagels D) up to 3500 bagels

The average total cost curve eventually slopes upwards because of the A) law of diminishing returns. B) reductions in average fixed costs. C) increase in capital costs. D) decrease in labor costs.

The economic profit of a perfectly competitive firm A) is less than its total revenue. B) equals its total revenue. C) is greater than its total revenue. D) is less than its total revenue if its supply curve is inelastic and is greater than its total revenue if its supply curve is elastic.

The long run is a period of time in which A) all factors of production are variable. B) all factors of production are fixed. C) some but not all factors of production are fixed. D) some but not all factors of production are variable.

The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm is producing 1 pound of cookies, to maximize its profit it will A) increase its output. B) decrease its output. C) continue producing 1 pound of cookies. D) shut down.

The table above provides cost data for a perfectly competitive firm producing toy cars. The firm is producing non-divisible goods. If the market price is $70 and the firm is a profit maximizer, the firm can earn a maximum economic profit of ________. A) a loss of $500 B) a loss of $10 C) a loss of $510 D) $210

The table above shows some of the costs for a perfectly competitive firm. If the price is $160 per unit, how many units of output will the firm produce? A) 8 B) 9 C) 10 D) more than 10

Total economic profit is A) total revenue minus total opportunity cost. B) total revenue divided by total cost. C) marginal revenue minus marginal cost. D) marginal revenue divided by marginal cost.

A company could produce 100 units of a good for $320 or produce 101 units of the same good for $324. The $4 difference in costs is A) the marginal benefit of producing the 101st unit. B) the marginal cost of producing the 101st unit. C) both the marginal benefit and the marginal cost of producing the 101st unit. D) neither the marginal benefit nor the marginal cost of producing the 101st unit.

A firm's marginal cost is $30, its average total cost is $50, and its output is 800 units. Its total cost of producing 801 units is A) less than $40,000. B) between $40,000 and $40,050. C) between $40,050 and $40,080. D) greater than $40,080.

A perfectly competitive firm maximizes its profit by A) setting its price so that it exceeds the marginal revenue. B) choosing to produce the quantity that sets MCequal to MR. C) cutting wages. D) manipulating demand.

A perfectly competitive firm that is producing a positive quantity of a good maximizes its economic profit if it produces so that A) total revenue = total cost. B) marginal revenue = marginal cost. C) average revenue = average total cost. D) average total cost = average variable cost.

Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his economic loss will be A) $0. B) $1,000. C) $1,200. D) $4,000.

Charlie's Chimps is a perfectly competitive firm that produces cuddly chimps for children. The market price of a chimp is $10, and Charlie's produces 100 chimps at a marginal cost of $9 a chimp. Charlie's ________. A) is maximizing its profit B) will maximize its profit if it produces more than 100 chimps C) will maximize its profit if it lowers the price to $9 a chimp D) will maximize its profit if it produces fewer than 100 chimps

In the above table, the marginal product is greatest when the A) first worker is hired. B) second worker is hired. C) third worker is hired. D) fourth worker is hired.

In the above table, the marginal product of the fourth worker is A) 1. B) 3. C) 4. D) 6.

The above figure shows the costs at Barney's Bagel Bakery. After 3000 bagels are produced each day, the ATC curve starts to slope upward because the A) MC curve slopes upward. B) MC exceeds the ATC. C) AFC curve (not shown) starts to slope upward. D) None of the above answers is correct.

The above figure shows the costs at Barney's Bagel Bakery. As the amount of output increases, the AVC curve approaches the ATC curve because the A) TFC curve (not shown) slopes down. B) AFC curve (not shown) slopes down. C) MC curve is rising. D) AVC curve is rising.

The marginal product of labor is equal to the A) total product divided by the total number of workers hired. B) increase in the total product that results from hiring one more worker with all other inputs remaining the same. C) slope of the marginal product of labor curve. D) None of the above answers are correct.

The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm increases its output from 2 pounds of cookies to 3 pounds, the marginal revenue is ________ per pound of cookies. A) $11 B) $15 C) $30 D) $45

The table above gives the total revenue and total cost for a perfectly competitive firm producing chocolate chip cookies. If the firm is producing 4 pounds of cookies, to maximize its profit it will A) increase its output. B) decrease its output. C) continue producing 4 pounds of cookies. D) shut down.

The table above shows some of the costs for a perfectly competitive firm. The firm will produce 9 units of output if the price per unit is A) $1750. B) $200. C) $300. D) $500.

Total product is A) the increase in output that results from a one-unit increase in the quantity of labor employed with all other inputs remaining the same. B) maximum output that a given quantity of labor can produce. C) maximum amount of output produced by a given quantity of labor divided by the given quantity of labor employed. D) maximum amount of amount of output produced by a given quantity of labor divided by price of the output.

Using the data in the above table, what is the marginal product of the second worker? A) 4.5 pizzas per hour B) 4 pizzas per hour C) 5 pizzas per hour D) The marginal product is undefined.

Using the data in the above table, what is the marginal product of the third employee? A) 2 pizzas per hour B) 3 pizzas per hour C) 4 pizzas per hour D) 12 pizzas per hour

Which of the following would be classified as a variable cost for the local Texaco station? A) Interest payments to a local bank for a 5-year loan. B) The total wages paid to the workers who are all paid $16.00 per hour, no matter how many hours they work each week. C) The premiums paid for liability insurance, which are constant throughout the life of the contract. D) The opportunity cost of money used to finance the installation of some new pumps.

Sandra's Sweaters' production function is shown in the above table. Sandra rents three knitting machines for $30 a day each and hires workers at a wage rate of $40 a day. If Sandra produces 18 sweaters per day, what is her average total cost? A) $5.00 B) $6.67 C) $9.44 D) $10.00

Sandra's Sweaters' production function is shown in the above table. Sandra rents three knitting machines for $30 a day each and hires workers at a wage rate of $40 a day. If the rental rate of capital rises to $50 per machine a day, Sandra's ________ curve shifts upward. A) average variable cost B) total variable cost C) average fixed cost D) marginal cost

The above figure shows the costs at Barney's Bagel Bakery. At which of the following amounts of output is the AFC be the lowest? A) at 2000 bagels B) at 3000 bagels C) at 3500 bagels D) None of the above because the AFC is constant regardless of how many bagels are produced each day.

The above figure shows the costs at Barney's Bagel Bakery. For which of the following levels of output does the average product of labor exceed the marginal product of labor? A) at 1000 bagels daily B) at 2000 bagels daily C) at 3000 bagels daily D) all of the above

The marginal revenue curve for a perfectly competitive firm is A) an upward sloping curve. B) a downward sloping curve. C) a horizontal line. D) None of the above answers is correct.

The market for fish is perfectly competitive. So, the price elasticity of demand for fish from a single fishing boat A) is less than the elasticity of demand for fish overall. B) equals the elasticity of demand for fish overall. C) is greater than the elasticity of demand for fish overall. D) is sometimes greater than and sometimes less than the elasticity of demand for fish overall.

Using the data in the above table, what is the average product of three employees? A) 2 pizzas per hour B) 3 pizzas per hour C) 4 pizzas per hour D) 12 pizzas per hour

When marginal cost is greater than average total cost, the A) marginal cost decreases as output increases. B) marginal cost does not change as output increases. C) average total cost increases as output increases. D) average total cost decreases as output increases.

he demand for wheat from farm A is perfectly elastic because wheat from farm A is A) a perfect complement for wheat from farm B. B) a normal good. C) a perfect substitute for wheat from farm B. D) an inferior good.

A firm's average variable cost is $60, its total fixed cost is $3,000, and its output is 600 units. Its average total cost is A) less than $58. B) between $58 and $62. C) between $62 and $64. D) more than $64.

A perfectly competitive firm has a total revenue curve that is A) upward sloping with an increasing slope. B) downward sloping with a constant slope. C) upward sloping with a decreasing slope. D) upward sloping with a constant slope.

A perfectly competitive market is characterized by A) high barriers to entry. B) firms that are price setters. C) firms facing a downward sloping demand curve. D) no restrictions on entry into the market.

Based on the table above which shows Chip's costs, if rice sells for $600 a ton, Chip will A) shut down because he incurs an economic loss. B) shut down because the price is below his minimum average variable cost. C) stay open because he makes an economic profit. D) stay open because the price is above his minimum average variable cost.

Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. If he increases output to 220 earmuffs, his total cost increases to $2100, and his fixed cost remains $400. What is Ernie's marginal cost per earmuff? A) $105 B) $35 C) $9.55 D) $5

If Steve's Apple Orchard, Inc. is a perfectly competitive firm, the demand for Steve's apples has A) zero elasticity. B) unitary elasticity. C) elasticity equal to the price of apples. D) infinite elasticity.

In perfect competition, A) each firm can influence the price of the good. B) there are few buyers. C) there are significant restrictions on entry. D) all firms in the market sell their product at the same price.

In perfect competition, restrictions on entry into an market A) apply to both capital and labor. B) apply to labor but not to capital. C) apply to capital but not to labor. D) do not exist.

In the above figure, the firm will produce A) 0 units. B) 5 units. C) 15 units D) 20 units.

In the above table, the average product of three workers is A) 1. B) 2. C) 3. D) 4.

In the above table, the marginal product of the second worker is A) 1. B) 2. C) 3. D) 6.

In the above table, the marginal product of the third worker is A) 1. B) 2. C) 3. D) 4.

Jane's Garage Cleaning is a perfectly competitive firm that currently cleans 40 garages a week. Jane's marginal cost is less than the price she charges. Jane can increase her profit if she A) charges a higher price. B) charges a lower price. C) cleans fewer than 40 garages a week. D) cleans more than 40 garages a week.

Perfect competition implies that A) there are many firms in the market. B) all firms are price takers. C) all firms are producing the same identical product. D) All of the above answers are correct.

The difference between a perfectly competitive firm's total revenue and its total cost is A) always positive. B) always negative. C) always zero. D) greatest at the profit-maximizing level of output.

The market for lawn services is perfectly competitive. Larry's Lawn Service cannot increase its total revenue by raising its price because ________. A) Larry's supply of lawn services is perfectly inelastic B) the demand for Larry's services is perfectly inelastic C) Larry's supply of lawn services is inelastic D) the demand for Larry's services is perfectly elastic

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