Econ 303 HW 7

An improvement in technology would result in Part 2 A. downward shifts of MC and reductions in output. B. downward shifts of MC and increases in output. Your answer is correct. C. increased quality of the​ good, but little change in MC. D. upward shifts of MC and increases in output. E. upward shifts of MC and reductions in output.

B

Because industry X is characterized by perfect​ competition, every firm in the industry is earning zero economic profit. If the product price​ falls, no firm can survive. Do you agree or​ disagree? Discuss. A. correct because firms would be earning negative economic profit. B. incorrect because firms will exit the industry in the long​ run, reducing supply until the price rises to the lowest point on the​ long-run average cost curve. C. incorrect because new firms will enter the industry in the long​ run, increasing demand until the price rises to the lowest point on the​ long-run average cost curve. D. incorrect because firms will increase supply in the short ​run, producing more output to offset the decrease in price. E. incorrect because firms will produce in the short run as long as price is above the average fixed cost of production.

B

I. The​ firm's decision to produce zero output when the price is less than the average variable cost of production is known as the shutdown rule. II. The​ firm's supply decision is to generate zero output for all prices below the minimum AVC. A. I is​ true, and II is false. B. I and II are true. Your answer is correct. C. I and II are false. D. II is​ true, and I is false.

B

In an​ increasing-cost industry, expansion of output Part 2 A. causes economies of scale to occur. B. causes input prices to rise as demand for them grows. C. occurs without diminishing marginal product. D. leaves input prices constant as input demand grows. E. occurs under conditions of increasing returns to scale.

B

Marginal​ revenue, graphically, is Part 2 A. the slope of a line from the origin to the end of the total revenue curve. B. the slope of the total revenue curve at a given point. C. the slope of a line from the origin to a point on the total revenue curve. D. the horizontal intercept of a line tangent to the total revenue curve at a given point. E. the vertical intercept of a line tangent to the total revenue curve at a given point.

B

Suppose a technological innovation shifts the marginal cost curve downward. Which one of the following cost curves does NOT​ shift? A. ​Firm's short-run supply curve B. Average fixed cost curve C. Average total cost curve D. Average variable cost curve

B

The shutdown decision can be restated in terms of producer surplus by saying that a firm should produce in the short run as long as Part 2 A. revenue exceeds producer surplus. B. producer surplus is positive. Your answer is correct. C. profit and producer surplus are equal. D. producer surplus exceeds fixed cost. E. producer surplus exceeds variable cost.

B

At the​ profit-maximizing level of​ output, marginal profit Part 2 A. is increasing. B. may be​ positive, negative, or zero. C. is zero. D. is also maximized. E. is positive.

C

At the​ profit-maximizing level of​ output, what is the relationship between the total revenue​ (TR) and total cost​ (TC) curves? Part 2 A. They must​ intersect, with TC cutting TR from above. B. They cannot be tangent to each other. C. They must have the same slope. D. They must​ intersect, with TC cutting TR from below. E. They must be tangent to each other.

C

Consider the following statements when answering this question. I. Increases in the demand for a​ good, which is produced by a competitive​ industry, will raise the​ short-run market price. II. Increases in the demand for a​ good, which is produced by a competitive​ industry, will raise the​ long-run market price. Part 2 A. I is​ false, and II is true. B. I and II are false. C. I and II are true. D. I is​ true, and II is false.

C

I. Under perfect​ competition, an upward shift in the marginal cost curve​ (perhaps due to a higher price for a variable​ input) also shifts the average variable cost curve upward. II. Under perfect​ competition., an upward shift in the marginal cost curve​ (perhaps due to a higher price for a variable​ input) reduces firm output but may increase firm profits. Part 2 A. I and II are false. B. II is​ true, and I is false. C. I and II are true. D. I is​ true, and II is false

D

If the market price for a competitive​ firm's output​ doubles, then A. at the new​ profit-maximizing output, price has increased more than marginal cost. B. at the new​ profit-maximizing output, price has risen more than marginal revenue. C. competitive firms will earn an economic profit in the long run. D. the marginal revenue doubles. Your answer is correct. E. the​ profit-maximizing output will double.

D

If a competitive firm has a​ U-shaped marginal cost​ curve, then A. the​ profit-maximizing output is found where MC​ = MR and MC is constant. B. the​ profit-maximizing output will always generate positive producer surplus. C. the​ profit-maximizing output will always generate positive economic profit. D. the​ profit-maximizing output is found where MC​ = MR and MC is decreasing. E. the​ profit-maximizing output is found where MC​ = MR and MC is increasing

E

Part 1 Suppose a perfectly competitive​ firm's total cost of production​ (TC) is ​TC(q)=q3−12q2+60q+20​, and the​ firm's marginal cost of production​ (MC) is ​MC(q)=3q2−24q+60. Part 2 The​ firm's short-run supply curve is given by Part 3 A. P=q2−12q+60+20q. B. P=q2−12q+60 for prices above ​$24. C. P=3q2−24q+60 for prices above ​$6. D. P=q2−12q+60 for prices above ​$34. E. P=3q2−24q+60 for prices above ​$24.

E

The demand curve facing a perfectly competitive firm is A. not defined in terms of average or marginal revenue. B. the same as its marginal revenue​ curve, but not its average revenue curve. C. the same as its average revenue​ curve, but not the same as its marginal revenue curve. D. not the same as either its marginal revenue curve or its average revenue curve. E. the same as its average revenue curve and its marginal revenue curve.

E

True or​ false: A firm should always produce at an output at which​ long-run average cost is minimized. Explain. A. true because in the long run competition will force firms to produce at lowest possible​ long-run average cost. B. true because in the short run firms will adjust their mix of inputs such that average costs are minimized. C. false because in the long run price is greater than long−run average cost. D. false because in the long run firms will only maximize profit if the industry is competitive. E. false because in the short run this may not be possible with fixed factors of production.

E

Which of the following is an example of a homogeneous​ product? A. Gasoline B. Copper C. Personal computers D. Winter parkas E. Both A and B

E

Why would a firm that incurs losses choose to produce rather than shut​ down? In a perfectly competitive​ industry, if a firm is incurring​ losses, then it might choose to produce in the short run because A. variable costs are greater than fixed​ costs, resulting in smaller losses than would result from shutting down. B. average fixed cost becomes zero in the long​ run, resulting in profit in the long run. C. revenue is greater than fixed costs​, resulting in smaller losses than would result from shutting down. D. price is greater than average variable cost​, resulting in profit in the long run. E. revenue is greater than variable costs​, resulting in smaller losses than would result from shutting dow

E

hat happens in a perfectly competitive industry when economic profit is greater than​ zero? Part 2 A. There may be pressure on prices to fall. B. Firms may move along their LRAC curves to new outputs. C. New firms may enter the industry. D. Existing firms may get larger. E. All of the above may occur.

E but what are they

Because of the relationship between a perfectly competitive​ firm's demand curve and its marginal revenue​ curve, the​ profit-maximization condition for the firm can be written as A. AR​ = MR. B. P​ = AVC. C. P​ = MC. D. P​ = MR. E. P​ = AC.

c

Part 1 The textbook for your class was not produced in a perfectly competitive industry because Part 2 A. there are so few firms in the industry that market shares are not​ small, and​ firms' decisions have an impact on market price. B. ​upper-division microeconomics texts are not all alike. C. it is not costless to enter or exit the textbook industry. D. of all of the above reasons.

d. but what are they