econ exam 3

profit maximization occurs when

a firm expands output until marginal revenue is equal to marginal cost.

Brady Industries has average variable costs of $1 and average total costs of $3 when it produces 500 units of output. The firm's total fixed costs equal

1000

what is the break-even price for this farmer

13.50

what is the average total cost of producing 2 units of output

24

what is the marginal cost of the 4th unit of output

4

if the market price is 18, how many units of output should the firm produce to maximize profit

5

if the market price of a bushel of soybeans is 15, how many bushels will the farmer produce to maximize short-run profit

5

if the market price of a bushel of soybeans is 15, what will the farmers short-run profit at the optimal level of production

6

a perfectly competitive industry is in a state of long run equilibrium. which expression must be true

P=MR=MC=ATC

if all firms in an industry are price takers

an individual firm cannot alter the market price even if it doubles its output.

a flag company produces 1000 flags per week. At this production level, the average variable cost is 10 per flag and the average fixed cost is 5 per flag. when the company increases output from 1000 to 1001 flags per week, its marginal cost is 16. which of the following is true about this crease in output

average fixed costs will decline, but average variable and average total costs will increase

Kathleen owns a photography business in Mobile, Alabama. The market for photography is very competitive. At Kathleen's current production level, her marginal cost is $15 and her marginal revenue is $12. In order to maximize profits, Kathleen should:

decrease production

the long run average cost curve of the company producing flags decreases as more flags are produced. This reflects

increasing returns to scale

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital). In the short run, the firm most likely considers

labor to be a variable cost and capital to be a fixed cost

For any given price, a firm in a competitive market will maximize profit by selecting the level of output at which price intersects the

marginal cost curve

When a firm hires another employee and, as a result, total output increases, this change in total output is also known as:

marginal product

if perfectly competitive firms are making positive economic profits in the short run, then in the long run

new firms will enter the industry

which of the following is a key characteristic of a competitive market

producers sell nearly identical products

marginal revenue is the change in total

revenue when the firm produces additional units

when revenue is insufficient to cover cost, the firm

suffers a loss

on a 100-acre farm, a farmer is able to produce 3000 bushels of wheat when he hires 2 workers. He is able to produce 4400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product

the farmer is able to produce 5600 bushels of wheat when he hires 4 workers

market structures are categorized by

the number of firms and whether products are differentiated

In economics, the short run is defined as:

the period in which some inputs are considered to be fixed in quantity.

if a firm experiences decreasing returns to scale, it's long run average cost curve is

upward-sloping

If a firm produces nothing, which of the following costs will be zero?

variable cost