Econ test 2, chapter 5, 7,8,9,12
Refer to Figure 22.3 for a perfectly competitive firm. If the market price is $23,
The firm will have above-normal profits.
The short-run production function shows how output changes when
The quantity of labor changes.
In economics, the long run is considered to be
The time period when all costs are variable.
Diseconomies of scale are reflected in
The upward-sloping segment of the long-run average total cost curve.
Refer to Figure 23.1 for a perfectly competitive firm. This firm should shut down in the short run if the market price is below
$5.
Which of the following represents the change in total cost that results from a one-unit increase in production?
Marginal cost.
Total utility is maximized when
Marginal utility is zero.
The marginal physical product of labor in Figure 21.1 is negative for the
Sixth worker.
What is the average fixed cost when output is 120 units in Figure 21.2?
$80.00.
Refer to Figure 19.2. The total utility of two apples is
11 utils.
(b) At that equilibrium, what is Price?,Output?,Total Profit?
12,6,24
In Table 19.3, what is the marginal utility of the fifth unit of cola?
12.
The marginal physical product of the third unit of labor in Figure 21.1 is
12.0 units per day.
Refer to Table 19.3. If Michael has $40 to spend on cola and pretzels, what is his maximum utility possible?
174.
Refer to the data in Figure 22.1. The profit-maximizing output for this firm is
200 units.
Refer to Figure 22.3 for a perfectly competitive firm. At a market price of $23, total profits are maximized at an output of
39.
Refer to Table 19.1. What is Josh's total utility from consuming the third slice of pizza?
54 utils.
In Table 19.2, the marginal utility of the third unit is
6.
n Table 19.3, what is the total utility of two units of cola?
72.
In long-run equilibrium, what is Price?Output?Total profit?
9,5,0
The shutdown point occurs where price is below the minimum of
AVC.
A monopolistically competitive firm can raise its price somewhat without fear of great change in unit sales because of
Brand loyalty.
Sellers can gain profits from price discrimination because
Charging different prices based on willingness to pay can increase revenues without increasing costs.
What is the four-firm concentration ratio in an industry with the following market shares?
Concentration ratio:
The benefit that consumers get when they buy goods at the equilibrium price but were willing to pay more is called
Consumer surplus.
Graphically, as a consumer buys more of a good, the marginal utility line will
Continuously decline if diminishing returns are present. Correct
Refer to Figure 22.2 for a perfectly competitive firm. The profit-maximizing quantity of output is
D
The demand curve faced by a monopolistically competitive firm is
Downward-sloping.
For a competitive market in the long run,
Economic profits induce firms to enter until profits are normal.
Refer to Figure 22.3 for a perfectly competitive firm. If the market price is $15,
Economic profits will be zero.
When the size of a factory (and all its associated inputs) doubles and, as a result, output more than doubles,
Economies of scale must exist.
As an In and Out Burger restaurant increases the number of employees for a specific restaurant,
Efficiency will suffer as the restaurant becomes too crowded with employees.
If long-run economic losses are being experienced in a competitive market,
Equilibrium price will rise as firms exit.
Product differentiation refers to
Features that make one product appear different from competing products in the same market.
In a monopolistically competitive market with negative economic profits,
Firms will exit until economic profits are zero.
In the short run, when a firm produces zero output, total cost equals
Fixed costs.
The demand curve for each perfectly competitive firm is
Horizontal.
The short run is the time period
In which some costs are fixed.
Economic cost
Includes both implicit and explicit costs.
A successful advertising campaign will
Increase the demand for the advertised good.
The exit of firms from a market, ceteris paribus,
Increases the equilibrium price in the market.
Monopolistic competition results in allocative
Inefficiency and productive inefficiency.
Marginal cost
Is the change in total cost from producing one additional unit of output.
If an individual demands a good, it means that he or she
Is willing and able to purchase the good at some price.
Refer to Figure 26.2 for a monopolistically competitive firm. At the profit-maximizing output and price, this firm is experiencing economic
Losses but should keep producing in the short run
The most desirable rate of output for a firm is the output that
Maximizes total profit.
A production function shows the
Maximum output that can be produced with varying combinations of factor inputs.
Which of the following market structures will have only normal profit in the long run?
Monopolistic competition.
Which type of firm engages in nonprice competition?
Monopolistically competitive firms.
Refer to Figure 26.4 for a monopolistically competitive firm. In the long run this firm will charge a price of ________ and produce an output of _______.
P4; Q3
Which of the following market structures will have higher output in the long run than monopolistic competition, ceteris paribus?
Perfect competition
Refer to Figure 26.1 for a monopolistically competitive firm. The profit-maximizing output and price combination for this firm in the short run is
Q2, P4.
Refer to Figure 26.1. The output that maximizes production efficiency for this firm is
Q3.
A monopolistically competitive industry is characterized by ________ concentration ratios and ________ entry barriers.
low; low
Suppose the typical catfish farmer was incurring an economic loss.(a) What price level illustrates these losses on the firm in the above diagram?
p1
(c) What price would prevail in long-term equilibrium?
p2
Brand loyalty makes the demand curve facing the monopolistically competitive firm less price-elastic.
true
Refer to Figure 21.5. Economies of scale occur in the following range of factory sizes
#1 to #3.
The marginal cost between 20 and 30 units of output in Table 21.2 is
$1.80.
The marginal cost of the fourth unit of output in Table 21.4 is
$20.00.
What is the marginal cost of the 120th unit of output in Figure 21.2?
$288.00.
What is the total cost of 120 units in Figure 21.2?
$34,560.
Refer to the data in Figure 22.1. The total fixed costs for this firm are approximately
$50.
Which of the following are factors of production?
Land, labor, capital, and entrepreneurship.
(b) What forces would raise the price?
An increase in market demand or a decrease in market supply
If there are many firms in an industry producing goods that are similar but slightly different, this is an example of
Monopolistic competition.
Which of the following is most likely a fixed cost?
The rent for a factory.
Explicit costs
Are the sum of actual monetary payments made for resources used to produce a good.
Which of the following costs do not change when output changes in the short run?
Fixed costs.
Profit is
The difference between total revenue and total cost.
If marginal utility is negative, then
Total utility will decrease with additional consumption.
Firms in a monopolistically competitive market will
Use the profit-maximizing rule MC = MR.
If economic profits are earned in a competitive market, then over time
Additional firms will enter the market.
The $600 paid in property taxes counts as
An explicit cost.
Assuming the entrepreneur does not pay herself, the $1,000 she could earn as an employee elsewhere is considered
An implicit cost.
The law of diminishing marginal utility states that
As a consumer enjoys successive units of a good, eventually marginal utility will fall. Correct
The perfectly competitive market structure includes all of the following except
Large advertising budgets.
The additional pleasure or satisfaction from a good declines as more of it is consumed in a given period. This is the definition of the
Law of diminishing marginal utility.
The shape of the marginal cost curve reflects the
Law of diminishing returns.
Brand loyalty usually makes the demand curve for a product
Less price-elastic.
Short-run profits are maximized at the rate of output where
Marginal revenue is equal to marginal cost.
(a) Identify the short-run equilibrium of a monopolistically competitive firm.
Points A and A'
c) Identify the long-run equilibrium of the same firm.
Points B and B'
A firm's total revenue can be determined by
Price times quantity.
Refer to Figure 23.1. If the market price equaled $10, in the short run this firm should
Produce with an economic loss
Which of the following most characterizes monopolistic competition?
Product differentiation.
Economists assume the principal motivation of producers is
Profit.
If new firms enter a monopolistically competitive market, the demand curves for the existing firms will
Shift to the left.
The market price for T-shirts sold in a perfectly competitive market is determined by
Supply and demand.
Marginal utility is
The additional utility a consumer enjoys from the consumption of one more unit of a good. Correct
A monopoly occurs when
There is only one producer of a good or service. Correct
Average total cost is equal to
Total cost divided by quantity produced.
The difference between the total revenue and total cost curves at a given output is equal to
Total profit.
A firm maximizes total profit when
Total revenue exceeds total cost by the greatest amount.
Refer to Table 19.3. Suppose Michael has $28 to spend on cola and pretzels. What combination should he purchase in order to maximize his utility?
Two colas and three pretzels
At any given rate of output, the difference between total cost and fixed cost is
Variable cost.
Which of the following is characteristic of a perfectly competitive market?
Zero economic profit in the long run.
At 4 units of output in Table 21.4, the total variable cost is
$62.00.
In which of the following types of markets does a single firm have the most market power?
Monopoly.
A concentration ratio measures the
Proportion of industry output produced by the largest firms
The entry of firms into a market
Reduces the profits of existing firms in the market.
Any point on the budget constraint
Represent a combination of two goods that are affordable.
Utility refers to the
Satisfaction obtained from a good or service. Correct
Price discrimination occurs when
Sellers charge two separate prices for the same product to two different groups. Correct
Marginal cost is equal to
The change in total costs divided by the change in quantity produced.
The main difference between perfect competition and monopolistic competition is
The degree of product differentiation.
Refer to Figure 22.3 for a perfectly competitive firm. Which of the following statements is true for this firm between the prices of $10 and $15?
The firm is experiencing economic losses but should continue to produce.
A perfectly competitive firm is a price taker because
The price of the product is determined by many buyers and sellers.
Total utility is
The sum of the marginal utilities from the consumption of good.