final exam review

which of these is an example of a decreasing cost industry?

c) memory chips for tablets

In the graph, which shows a firm in a perfectly competitive market, what is the profit- maximizing price and quantity?

d) price= $12; quantity = 14

suppose that a law passes that causes working conditions throughout the economy to improve. The labor supply curve should shift _____ and the number of workers available at any given wage rate will _______.

d) right; increase

marginal product is:

The change in total output, given a change in labor input

in the graph, which shows a firm in a perfectly competitive market, calculate the total profit.

a) $80

How many workers would be used to produce 88 bowling balls?

a) 4

teachers salaries are 70% of the cost of educating a sixth grader. The demand for teachers is most likely to be:

a) elastic

which factor is NOT a determinant of demand?

a) history of the product

the figure shows the cost curves for a representative firm. At an output level of five units, the average fixed, variable, and average total costs, respectively, would be:

b) $40; $80; $120

based on the table, the average fixed cost of producing 40 units of output is:

b) 12.50

which of these could occur in the short run?

b) Walmart hires five new employees

in the demand curve shown, an increase in price from $1 to $2 will:

b) cause quantity demanded to fall from 30 units to 20 units

any business decision should take sunk costs into consideration

b) false

if the market price is $60, a firm's minimum average total cost is $70, and minimum average variable cost is $50, what should the firm do in this perfectly competitive market?

c) the firm should continue producing in the short run in order to minimize losses

if a firm can change all of its factors of production, then it is operating inn:

c) the long run

which product is least likely to be produced in a perfectly competitive market?

d) airline jet fuel

marginal cost is calculated by:

d) dividing the change in total cost by the change in output

in a perfectly competitive industry, short-run economic profits will lead firms to ____ the market, causing market price to ____

d) enter; decrease

on a demand curve:

d) price is on he vertical axis and quantity demanded is on the horizontal axis

in the wages of Nike employees increase by 25% and the quantity of labor demanded decreases by 10%, the demand for labor is:

a) inelastic

the graph represents a firm that produces the profit-maximizing quantity in the short run. What will happen in the long run?

a) market supply will increase, pushing prices lower

a firm in a perfectly competitive industry would exhibit which characteristic? 1. An ability to produce as much output as the firm desires at the market price 2. no economic profits in the short run but possible economic profits in the long run

a) only 1

which market structure does not exhibit a downward-sloping demand curve for the firm?

a) perfect competition

a firm will MOST likely decrease the price of its output if the:

a) quantity supplied of the good exceeds the quantity demanded

a shift in the supply curve occurs when one or more of the determinants of supply changes

a) true

economists have not been persuaded that alternative behavioral assumptions for firms, such as sales maximization, yield superior results to the assumption of profit maximization.

a) true

in the US, it is illegal for a company to restrict hiring to only workers who have already joined a union

a) true

by producing a number of different products that are interdependent, a firm can experience economies of scale

b) false

if sellers expects the price of their products to rise in the future, they are likely to increase their supply in the near future

b) false

very few industries experience constant returns to scale

b) false

the long-run industry supply curve is _____ than the short-run industry supply curves because supply is ______ elastic in the long run

b) flatter; more

A shift to the right of the demand curve caused by a(n)

b) increase in income if the good is a normal good

bus tickets are often considered ________ goods because ____

b) inferior; as income rises, demand for bus tickets falls

which term is NOT a determinant of supply?

b) national income

if the price of copper pipes is $70 in a perfectly competitive market, and a firm is producing a quantity at which the marginal cost is $65, is this firm maximizing profit?

b) no, this firm should be producing more to maximize profit

a form of business that is owned jointly by several owners and in which there is unlimited liability is called a:

b) partnership

if Glass inc. produces 80 window panes per day at the market price of $60 in a perfectly competitive market, what would happen to price if Glass Inc. increases production to 120 window panes, all else equal?

b) the price would remain the same

which statement is NOT correct about markets?

b) they require a physical location for transactions to take place

the market price of pomegranates is $2, and JoAnne sells 25 pomegranates at the local farmer's market. The total revenue is _____ and the marginal revenue is ______.

c) $50.00; $2.00

which factor will NOT cause a change in demand?

c) a decrease in the price of a good

the substitution effect means that:

c) if wages increase, hours of work increases

if each of your first 7 employees adds more to output than a new worker hired, you are experiencing:

c) increasing marginal returns

which sequence of market structures ranks the barriers to entry from the fewest to the most?

c) perfect competition; oligopoly; monopoly

the state of Florida is experiencing a drought that has caused the price of water that farmers use to grow oranges to rise. This will cause a decrease in the:

c) supply of oranges

the supply of coffee has increased twice as much as the demand for coffee. As a result, we can predict a(n):

d) decrease in equilibrium price, but equilibrium quantity increases

if consumers believe that an item will not be available in the future, then demand will shift ____ and the equilibrium quantity will _____

d) right; rise

When a firm experiences diseconomies of scale, average costs:

d) rise as output rises

if the average total cost is $10 and the price is $8 at the profit-maximizing quantity, what will happen in the long run in a perfectly competitive market?

d) some firms will exit the market, pushing the market price higher

using the data for the market for lattes in the table, at a price of $8, there is a ____ and the price will ____.

d) surplus; fall

In the Clearwater Cotton Candy Company hypothetically lays off its workers and shuts down, it incurs costs of $30,000. If it produces at full capacity, it incurs costs of $90,000. One would conclude that:

d) the costs of variable inputs at full capacity is $60,000