Econ HW def

Refer to the figure above. When the prevailing market price is P0, what is the area corresponding to the Total Cost of this firm?

A + B

costs include all of the costs of production that increase with the quantity produced.

Variable

If the average product for six workers is fifteen and the marginal product of the seventh worker is eighteen, then

average product is rising.

Oligopoly firms acting individually may seek to gain profits

by expanding levels of output and cutting prices

The demand curve as perceived by a monopolistic competitor is

downward-sloping

If the North American newsprint paper market has barriers to entry, then

entry will be blocked even if firms are earning high profits.

The term "constant returns to scale" describes a situation where

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

Which of the following would most likely create the setting for an oligopoly?

government grants Alex, Trent, and Alyse each a patent for their respective molybdenum based electric car batteries

If the CEO of I'MaBigBank is playing prisoner's dilemma then, from his perspective, the gains to be had from cooperation are

larger than the rewards from pursuing self-interest.

Diminishing ____________________________ occur when the marginal gain in output diminishes as each additional unit of input is added.

marginal returns

Following the assumption that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency?

output will be too small and its price too high.

If a perfectly competitive firm is a price taker, then

pressure from competing firms will force acceptance of the prevailing market price.

If a firm's revenues do not cover its average variable costs, then that firm has reached its

shutdown point

If the firm is producing at a quantity of output where marginal revenue exceeds marginal cost, then,

the firm should keep expanding production

The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation.

average variable cost; fixed costs

A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.

fixed costs; do not change

Refer to the diagram above. In this instance, at the range of output represented at point b,

total costs exceed total revenues.

If a firm holds a pure monopoly in the market and is able to sell 5 units of output at $4.00 per unit and 6 units of output at $3,90 per unit, it will produce and sell the sixth unit if its marginal cost is

$3.40 or less

The following table shows a monopolist's demand curve and cost information for the production of its good. What quantity will it produce?

30

Refer to the table below. The information pertains to the demand curve and the average cost curve for a natural monopoly firm. What will the price be in this market?

50

When P > MC in a monopolistically competitive market, that industry will most likely produce _______________ than would be found in a perfectly competitive industry.

a lower quantity of a good and charge a higher price

In the framework of monopolistic competition, advertising works because it causes

a steeper perceived demand curve, as well as a perceived demand curve to shift to the right.

Refer to the diagram above. In this instance, the marginal revenue curve

a. reflects a perfectly competitive firm b. reflects each of the above c. is equal to the price of the good d. is a horizontal straight line

The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls.

economies of scale

A monopolist is able to maximize its profits by

producing output where MR = MC and charging a price along the demand curve

The following figure shows the average cost curve, demand curve, and marginal revenue curve for a monopolist. After maximizing profits, what do the firm's costs equal?

the area of rectangle ABGH

The following figure shows the average cost curve, demand curve, and marginal revenue curve for a monopolist. After maximizing profits, what does the firm's revenue equal?

the area of rectangle ADEH

When entry occurs in a monopolistically competitive industry,

the perceived demand and marginal revenue curves for each firm will shift to the left