Microeconomics Exam #3

Which of the following refers to when a few firms have all or nearly all of the sales in an industry? A. Perfect competition B. monopoly C. oilogopoly D. monopolistic competition

C. oilogopoly

What name is given to expenditures that must be made before production starts and that do not change regardless of the level of production? A. Diseconomies of scale B. Marginal costs C. Variable costs D. Fixed costs

D. Fixed costs

A firms _________ consist of expenditures that must be made before production starts that typically, over the short run ___________ regardless of the level of production. A. fixed cost; are consistently changing B. variable costs; are constantly changing C. variable costs; do not change D. fixed costs; do not change

D. fixed costs; do not change

What is meant by increasing returns to scale? A. When expanding all inputs does not change the average cost of production. B. When the average cost of producing each individual unit increases as total output declines. C. When a larger-scale firm can produce at a lower cost than a smaller-scale firm. D. When the average cost of producing each individual unit declines as total output increases.

C. When a larger-scale firm can produce at a lower cost than a smaller-scale firm.

Which of the following characteristics relate to perfect competition? A. Expenditures that must be made before production starts and that do not change regardless of the level of production. B. Costs of production that increase with the quantity produced. C. Each firm faces many competitors that sell identical products. D. When the average cost of producing each individual unit declines as total output increases.

C. Each firm faces many competitors that sell identical products.

Which of the following characteristics relate to production technologies? A. a situation in which as the quantity of output rises, the average cost of production rises B. when the average of producing each individual unit declines as total output increases C. when a larger-scale firm can produce to output D. alternative methods of combining inputs to produce output

D. alternative methods of combining inputs to produce output

The term ________ describes a situation where the quantity of output rises, but the average cost of production falls. A. Marginal cost output B. diminishing marginal returns C. diseconomies of scale D. economies of scale

D. economies of scale

What is meant by average cost? A. When the marginal gain in output diminishes as each additional unit of input is added. B. Total cost divided by the quantity of output. C. The additional cost of producing one more unit. D. When expanding all inputs does not change the average cost of production.

B. Total cost divided by the quantity of output.

In order to determine the average variable cost, the firm's variable costs are divided by _______________________. A. diminishing marginal costs B. the quantity of output C. its' fixed costs D. its' average costs

B. the quantity of output

I'MaPizzaCo. produces and sells specialty pizzas. Last year, it produced 8,000 mushroom, sausage and spinach pizzas and sold each one for $8. To produce these 8,000 specialty pizzas, the company incurred variable costs of $24,000 and a total cost of $40,000. I'MaPizzaCo's average fixed cost to produce 8,000 specialty pizzas was A. $3.00 B. $1.80 C. $1.60 D. $2.00

D. $2.00

Refer to the table below. CHART If this information were used to create a total cost graph, the curve should A. begin at 40 on the vertical axis and slope upward. B. become steeper as quantity increases. C. become steeper due to diminishing returns. D. reflect all of the above.

D. reflect all of the above

____________________________ occur when the marginal gain in output diminishes as each additional unit of input is added. tA. Diminishing marginal returns B. Diminishing variable returns C. Diminishing marginal costs D. Diminishing average returns

A. Diminishing marginal returns

The term "constant returns to scale" describes a situation where A. expanding all inputs does not change the average cost of production. B. the quantity of output rises and the average cost of production falls. C. a larger-scale firm can produce at a lower cost than a smaller-scale firm. D. expanding all inputs changes the average cost of production.

A. expanding all inputs does not change the average cost of production.

In order to calculate marginal cost, the change in _______ is divided by the amount of change in quantity A. decreasing marginal cost B. either total cost or average cost C. either total cost or variable cost D. increasing marginal returns

C. either total cost or variable cost

Refer to the table below. CHART If the firm sells 5 units at a price of $30 each, then the marginal unit produced A. costs the same as the average cost. B. is adding to profits. C. is subtracting from profits. D. costs more than the average cost.

C. is subtracting from profits.