ECON 102 FINAL Exam V2

A monopolist can sell 3,000 units at a price of $48. Lowering price by $3 raises the quantity demanded by 400 units. What is the change in total revenue that results from this price change? - $9,000 - $144,000 - $153,000 - $90,000

$9,000

In order for a firm to continue producing, price must exceed __________ and total revenue must exceed __________. - marginal cost, total cost - ATC; total cost - AFC; total fixed cost - AVC; total variable costs - price; total cost

AVC; total variable costs

Use the following statements to answer this question: I. An increase in the firm's fixed costs will also shift the firm's short-run supply curve to the left. II. An increase in the firm's fixed costs will not shift the firm's short-run supply curve to the right or left, but it may alter how much of the marginal cost curve is used to form the short-run supply curve. - I and II are true. - I is true and II is false. - II is true and I is false. - I and II are false.

I and II are false

The short run is - a period of time in which all inputs are fixed. - a period of time in which all inputs are variable. - a period of time in which some inputs are fixed. - always less than a year.

a period of time in which some inputs are fixed

Profit: - Is the difference between total revenue and total cost. - Is the "residual" that the owners of a business receive. - Motivates people to own and operate a business. - All other choices.

all other choices

Which of the following is a consequence of competition? - An unrelenting squeeze on prices and profit. - Zero economic profit in the long run. - Elimination of the least efficient firms. - All other choices.

all other choices

The average fixed cost curve - always declines with increased levels of output. - always rises with increased levels of output. - declines as long as it is above marginal cost. - declines as long as it is below marginal cost. - remains constant.

always declines with increased levels of output

Explicit costs: - Include only payments to labor. - Are the sum of actual monetary payments made for resources used to produce a good. - Include the market value of all resources used to produce a good. - Are the total value of resources used to produce a good but for which no monetary payment is actually made.

are the sum of actual monetary payments made for resources used to produce a good

When marginal cost exceeds average total cost, - average fixed cost must be rising. - average total cost must be rising. - average total cost must be falling. - average total cost could be rising, falling, or constant. - marginal cost must be falling.

average total cost must be rising

If a perfectly competitive firm is producing a rate of output for which price exceeds MC, then the firm: - has an economic profit. - has an economic loss. - can increase profit by increasing output. - can increase profit by decreasing output.

can increase profit by increasing output

Equilibrium price is $10 in a perfectly competitive market. For a perfectly competitive firm, MR = MC at 233 units of output. At 233 units, ATC is $12, and AVC is $9. The best policy for this firm is to __________ in the short run. Also, total fixed cost equals __________ for this firm. - continue to produce; $3 - shut down; $699 - continue to produce; $699 - shut down; $2,796 - continue to produce; $2,796

continue to produce; $699

Since price __________ for a monopoly firm, the profit-maximizing monopoly firm does not produce the quantity of output for which price equals marginal cost. - does not equal marginal revenue - does equal marginal revenue - is higher for a perfectly competitive firm than - is lower for a perfectly competitive firm than

does not equal marginal revenue

In defining economic costs, economists recognize: - Explicit and implicit costs while accountants recognize only implicit costs. - Explicit and implicit costs while accountants recognize only explicit costs. - Only explicit costs while accountants recognize only implicit costs. - Only explicit costs while accountants recognize explicit and implicit costs.

explicit and implicit costs while accountants recognize only explicit costs

The demand curve faced by a perfectly competitive firm is - downward sloping - perfectly inelastic. - upward sloping - horizontal

horizontal

A perfectly competitive market promotes efficiency by pushing prices to the minimum of: - Short-run AVC. - Short-run MC. - Long-run ATC. - Long-run TC.

long-run ATC

If current output is less than the profit-maximizing output, which must be true? - Total revenue is less than total cost. - Average revenue is less than average cost. - Average revenue is greater than average cost. - Marginal revenue is less than marginal cost. - Marginal revenue is greater than marginal cost.

marginal revenue is greater than marginal cost

To maximize profits, a competitive firm will seek to expand output until: - Total revenue equals total cost. - Price equals marginal cost. - The elasticity of demand equals 1. - All other choices.

price equals marginal cost

Local telephone and utility services are typically: - Unregulated and are allowed to exploit all their available market power. - Heavily subsidized by local taxpayers. - Regulated by various government units to restrain their market power. - Inefficient because of a lack of viable competition.

regulated by various government units to restrain their market power

The perfectly competitive firm will produce in the - short run if P<AVC - long run if P<AVC - short run if P>AVC - long run if P<ATC but P>AVC

short run if P>AVC

Which of the following must always be downward-sloping? - The MC curve when it is below the ATC curve. - The MC curve when it is above the ATC curve. - The ATC curve when it is below the MC curve. - The ATC curve when it is above the MC curve.

the ATC curve when it is above the MC curve

Which of the following is probably the worst real-world example of a perfectly competitive market? - the market for corn - the market for automobiles - the stock market - the market for wheat

the market for automobiles

Marginal revenue, graphically, is - the slope of a line from the origin to a point on the total revenue curve. - the slope of a line from the origin to the end of the total revenue curve. - the slope of the total revenue curve at a given point. - the vertical intercept of a line tangent to the total revenue curve at a given point.

the slope of the total revenue curve at a given point

If the perfectly competitive firm is producing an output level at which price equals marginal cost, it is - earning profits. - taking losses. - earning normal profit. - There is not enough information to answer the question.

there is not enough information to answer the question

Economic losses are a signal to producers that: - Consumer demands are being satisfied. - Competitive efficiency is being achieved. - The market mechanism has failed. - They are not using society's scarce resources in the best way.

they are not using society's scarce resources in the best way