Microeconomics 1102 FINAL

A. both supply and demand are inelastic

a decrease in supply will cause the largest increase in price when A. both supply and demand are inelastic B. both supply and demand are elastic C. demand is elastic and supply is inelastic D. demand is inelastic and supply is elastic

$80

a firm's marginal cost has a minimum of $50, its AVC has a minimum value of $80, and it ATC has a minimum value of $90. Then the firm will shut down if the price of its product falls below

tariffs raise revenue for the government, but import quotas create surplus for those who get the licenses to import

a major difference between tariffs and import quota is that..

C. monopolistic competition

a market structure in which there are many firms selling products that are similar but not identical is known as: A. oligopoly B. monopoly C. monopolistic competition D. perfect competition

product differentiation

a monopolistically competitive firm faces a downward-sloping demand curve because...

minimizes ATC

the efficient scale of a firm is the quantity of output that

D. firms collude

An oligopoly would tend to restrict output and drive up price if: A. barriers to entering the industry are negligible B. firms engage in informative advertising C. firms produce a standardized product D. firms collude

illegal

Cartels in the U.S. are

c. firm's profit-maximizing level of output is less than 100 units

For a certain firm, the 100th unit of output that the firm produces has a marginal revenue of $10 and a marginal cost of $11. It follows that the: a. production of the 100th unit of output increases the firm's profit by $1 b. production of the 100th unit of output increases the firm's average total cost by $1 c. firm's profit-maximizing level of output is less than 100 units d. production of the 110th unit of output must increase the firm's profit by more than $1

D. the cost of bookkeeping services

Harry's Hotdogs is a small street vendor business owned by Harry Huggins. Harry is trying to get a better understanding of his costs by categorizing them as fixed or variable. Which of the following costs are most likely to be considered fixed costs? A. the cost of mustard B. the cost of hotdog buns C. wages paid to workers who sell hot dogs D. the cost of bookkeeping services

C. there are economies of scale in retail sales

Since the 1980s, Wal-Mart stores have appeared in almost every community in America. Wal-Mart buys its goods in large quantities and, therefore, at cheaper prices. Wal-Mart also locates its stores where land prices are low, usually outside of the community business district. Many customers shop at Wal-Mart because of low prices. Local retailers, like the neighborhood drug store, often go out of business because they lose customers. This story demonstrates that: A. consumers do not react to changing prices B. there are diseconomies of scale in retail sales C. there are economies of scale in retail sales D. there are diminishing returns to producing and selling retail goods.

harm the U.S. as a whole, because they reduce consumer surplus by the amount that exceeds the gain in producer surplus and government revenue.

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production. These taxes...

AFC curve

What curve is NEVER U-shaped?

an outward shift of

_____________ a nation's PPF represents economic growth.

B. marginal cost curve above its minimum AVC

a perfectly competitive firm's supply curve is its: A. marginal cost curve B. marginal cost curve above its minimum AVC C. marginal cost curve above its minimum ATC D. marginal cost curve above its minimum AFC

good that is non-rivalrous and non-excludable

a public good is...

limit on the quantity of inputs

a quota is..

unlike department stores, do not have significant economies of scale

a reason where there is more competition among restaurants than among large discount department stores is that restaurants...

the inability of one seller to influence price

a very large number of small sellers who sell identical products imply...

C. the seller can sell any quantity she wants at the prevailing market price

an individual seller in perfect competition will not sell at a price lower than the market because... A. demand is perfectly inelastic B. the seller would start a price war C. the seller can sell any quantity she wants at the prevailing market price D. demand for the product will exceed supply

have to take the market price as a given

both individual buyers and sellers in perfect competition...

product of an extra worker is less than the previous worker's marginal product

diminishing marginal product suggests that the marginal

D. long-run average total costs do not vary as output increases

constant returns to sale occur when a firm's...

marginal revenue is less than the price of the product

if a profit-maximizing faces a downward-sloping market demand curve, its

marginal cost curve above its AVC curve

in the short-run, a firm's supply curve is equal to

C. the slope of the total cost curve

marginal cost equals: A. total cost divided by quantity of output produced B. the output divided by the change in total cost C. the slope of the total cost curve D. the slope of the line drawn from the origin to the total cost curve

A. greater in the milk market than in the beef market

milk has an inelastic demand, and beef has an elastic demand. suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. the change in equilibrium price will be: A. greater in the milk market than in the beef market B. greater in the beef market than in the milk market the same in the milk and beef markets C. the same in the milk and beef markets D. any of the above could be correct

3 only

monopolies are inefficient because they: 1. eliminate barriers to entry 2. price their product at a level where marginal revenue exceeds marginal cost 3. restrict output below the socially efficient level of production

selling the same good at different prices to different customers

price discrimination is the business practice of

D. Oligopoly and PC

producing a homogenous product occurs in which of the following industries? A. MC and PC B. PC only C. Oligopoly, MC, and PC D. Oligopoly and PC

a decrease in the price of cattle

ranchers can raise either cattle or sheep on their land. what would cause the supply of sheep to increase?

common resource

rivalrous and non-excludable

the level of operation where long-run average costs are lowest

the minimum efficient scale is...

the marginal cost of producing each unit of the good

the supply curve of a public good shows

consumer surplus decreases and total surplus decreases in the market for that good

when a country that imports a particular good imposes a tariff on that good,

it cannot adjust the quantity of fixed inputs

when a factory is operating in the short run

the social benefit received by consumers is greater than the private benefit

when there is a positive externality...

B. firms are price takers

which of the following is NOT a characteristic of monopolistic competition? A. a large number of sellers B. firms are price takers C. free entry into the market D. a differentiated product

A. marginal revenue is less than price

which of the following statements applies to a monopolist but not to a perfectly competitive firm at their profit maximizing outputs? A. marginal revenue is less than price B. price equals marginal cost C. average revenue equals average cost D. marginal revenue equals marginal cost

B. demand and ATC

which two curves are tangent to each other in a monopolistically competitive market with zero economic profit? A. demand and AVC B. demand and ATC C. marginal revenue and AVC D. marginal revenue and AVC

because the lack of entry barriers would compete away profits

why do most firms in monopolistic competition typically make zero profit in the long run?