Microeconomics

a change in the quantity supplied

A change in the price of goods causes

unemployed resources

A country operates inside its production posibility curve; this may be caused by

the supply curve shifts upward and to the left

A decrease in supply will occur when

demand is elastic and price increases

A decrease in total revenue will decrease if

All of the following are characteristics of monopolistic competition EXCEPT

A few firms dominate in the industry

percentage change in quantity demanded divided by percentage change in price.

A goods price elasticity of demand can be calculated by using the formula of

demand decreases as income increases

A inferior good is one which

which of the following is a TRUE statement about a monopoly

A monopoly does not necessarily ear positive economic profits.

the products own price

A movement along the supply curve is induced by a change in

a unit

A representative unit that measures the want- satisfying power of a good is

the price is below the market clearing level

A shortage will occur when

A monopolist is defined as

A single supplier of a good or service for which there is no close substitute

A monopolist will earn economic profits when

ATC lies below the demand curve

A decline in the unemployment rate

All of the following would cause the production possibilities curve to shift outward EXCEPT

the supply curve shifts downward and to the right

An increase in supply will occur when,

fall as output rises

Average fixed cost

long run

If a firm can vary all factors of production, it is operating in the

negative

If a person claims, " I wouldn't eat a liver if you paid me", we can assume that is marginal utility for liver is

a price floor

If the government sets a minimum price at which a good or service can be sold, it thereby creates

marginal cost is rising

If the marginal product of an input is falling then the

perfectly inelastic

If the supply curve is vertical then supply is

voluntary costs.

In a market system the cost with associated with exchanging goods are known as

buyers and sellers together

In economics the what, how, and for whom questions in economics are determined by

must be set above equilibrium price

In order to be effective, a price floor

reduce their per- unit costs of producing the good

In order to increase the supply of a good, producers must

is higher than average variable cost.

In the short run average total cost

The monopolist will choose the price and output combination at which

MC equals MR

A monopolistically competitive firm maximizes profit by producing to the point at which

MC=MR

In the short run, a firm operating as a monopolistic competitor will produce to the point at which

MR=MC

To maximize profits, the monopolist should produce at which

MR=MC

Diminishing marginal product begins

Marginal cost will begin to rise at the point where

In which market structures does a firm have a least some ability to set the market price?

Monopolistic competition, oligopoly and monopoly

In which market structure is the firm able to earn long-run economic profits?

Oligopoly and Monopoly

people make different decisions in calm situations than in the situation in which emotions come into play.

One piece of evidence that possibly supports the bounded rationality assumption of behavioral economics is that experiments appear to have shown that

buyers to reduce the amount that want to buy and sellers to increase the amount they are willing to sell.

Other things being equal, a higher price induces

shortages

Price ceilings set below the equilibrium price cause

In a monopolistically competitive market, the consumer receives the benefit of

Product diversity

reduce the price of the newsletter

suppose the absolute price elasticity of demand for a newsletter subscriptions is 1.3. In order to increase the total revenues from subscriptions, the publishers should

there are few substitutes

the demand for diet soft drinks is relatively inelastic because

can be explained as the outcome of a consumer optimum in consumer choice theory.

the fact that the price of diamonds is higher than the price of water

the percentage change in demand divided by the percentage change in income

the income elasticity of demand is

decreases as more of the product is consumed

the law of diminishing marginal utility implies that the marginal utility for a certain product

the time period in which all factors of production can be varied

the long run is

the responsiveness of the quantity demanded of a good to a change of the price of the good.

the price elasticity of demand is a measure of

salt.

the price elasticity of demand would most likely be lowest for

If a monopolist raises its price,

the quantity demanded decreases

higher than the total utility of diamonds, but the marginal utility of diamonds is higher.

the total utility of water is

A firm can be the sole supplier of a good and is still not a monopolist if

there are very close substitutes for the good

one of the fundemental problems a cartel faces is

to determine how much each producer will decrease its output

Economist generally assume that firms attempt to maximize

total economic profits

the greater the bow of the production possibilities curve

typically the greater the specialization of resources,

how people make decisions about what they buy and how much

utility analysis helps economist understand `

a merger between firms in which one firm purchases an input from the other is called a

vertical merger

will be positive

when the two goods are substitutes for each other, the cross price elasticity of demand

"I chose the road less traveled"

which of the following statements indicated the idea of "trade-offs"

Variable inputs

The focus of firms decisions in the short run is primarily on

the main objective of advertising for a monoplistically competitive firm is

To differentiate and boost demand.

The price per unit times the total quantity sold is

Total Revenue

Which of the following statements is TRUE about the relationship between a firm's demand curve under perfect competition and monopoly?

Under perfect competition, the demand curve is perfectly elastic; under monopoly, the demand curve has elastic, unit elastic, and inelastic portions.

decrease because each worker now has less capital and other resources to work with

We assume that when a firm hires additional workers the marginal physical product of labor will

Command and control

What is the type of economic system that relies on one central authority to make economic decisions

Demand is very responsive to a change in price

When demand is elastic

because limited resources mean all the goods we want cannot be obtained

Why is it that all our wants can not be satisfied

The difference between price and average total cost is

average profit

Total revenue divided by total quantity is

average revenue

technology

changes in the production functions are associated with changes in

A member in a cartel can earn more profits by

charging a slightly lower price and raising production

A cartel is a form of

collusion

Successive downward movements along the demand curve for the product of a monopolist always generate successive

decreases in the additional per-unit revenues earned by the monopolist

what is true of the price elasticity of demand faced by a monopoly firm?

demand becomes more elastic as the range of imperfect substitutes expands.

in all decision making

economic analysis is used

in a perfectly competitive industry, which of the following is a market signal to resource owners?

economic profits

In the long run in a monopolistically competitive market, price will be

equal to ATC

a monopolist finds the price- output combination that maximizes its profits by

equating marginal revenue and marginal cost

cost that a firm incurs even when output is zero.

fixed cost are

fixed input

for a hot- dog vendor the hot dog represents

all of the above

governments may intervene in private markets through

cheating in the cartel is more likely to occur if the industry

has a large number of firms

utility

in economics another term for satisfaction is

After participating members of a cartel form an agreement on common prices and output quotas, then an individual firm can increase its own profits by

increasing production

The distinguishing of products by brand name, color, and other attributes is

is known as interdependence

monopolistic competition is characterized by

relative ease of entry into the market

when rents are set below the market clearing price

rent controls are

If it is not profitable for more than one firm to be in an industry, we have an example of

monopoly due to economies of scale

the total revenue of a perfectly competitive firm is calculated by

multiplying price by quantity

under the perfectly competitive market structure, the demand curve of an individual firm is

perfectly elastic

The perfectly competitive firm faces

perfectly elastic demand

When grocery stores issue special discount membership cards for shoppers effectively offering different prices based on quantities consumed, this is an example of

price discrimination

Monopolies misallocate resources because

price does not equal marginal cost

In the long-run equilibrium in a monopolistically competitive industry, a firm will

produce at a point to the left of the minimum point on its average total cost curve.

both material and nonmaterial desires

"wants" as an economic concept includes

in the short run, complete adjustment of all inputs is impossible, while in the long run all inputs can be adjusted

A basic distinction between long run and short run is that

In a perfectly competitive industry, the industry demand curve is

Downward sloping

change its plant size

During the short run a firm can not

how people make decisions

Economics is the study of

that period of time in which at least one of the firms inputs, usually plant size, is fixed

Economist generally describe the short run as being

In a perfectly competitive market in which all firms are maximizing their economic profits, their demand and supply curves intersect at a price of $8. From this we know that each

Firm's marginal cost of producing the good is $8

less of all goods may be produced in the future

Generally if a nation produces more consumer goods than capital goods

Generate a higher price for the good than would prevail under freely competitive markets

Government imposed quantity restrictions

price supports in order to keep farm incomes high

Government intervention in agriculture usually involves

In which market structure will a firm chose not to shut down when its price is less than average variable cost

None of the above. All firms will shut down when P<AVC

contain value judgements

Normative economic statements

first encounters negative marginal product

The point of saturation occurs when a firm

Zero.

The price elasticity of demand along a vertical demand curve is

the responsiveness of the quantity demanded of a good to a changes in the price of a good.

The price elasticity of demand is a measure of

The good under consideration is constitutes a major portion of the consumers budget

The real- income effect of a price change is most significant when

An associate of producers in an industry that agree to set common prices and output quotas to prevent competition is

a cartel

indirect or inverse relationship between price and quantity demanded

a demand curve represents an

A supply curve

a direct or positive relationship between price and quantity supplied is

A noncooperative game is

a game in which firms will not negotiate in any way

Mass marketing is

advertising intended to reach as many consumers as possible

the goal of a cartel is to

all of the above

a quantity restriction

an import quota is an example of

In a monopolistically competitive market there are

many firms producing similar but not identical products

A perfectly competitive firm will maximize profits when

marginal cost is equal to marginal revenue

a price floor

minimum wages are an example of