Econ Test 2 T/F
A competitive firm will produce in the short run so long as its price exceeds its average fixed cost
False
A pure monopolist will maximize profits by producing at that output where price and marginal cost are equal
False
Although individual purely competitive firms can influence the price of their products, these firms as a group cannot influence market price
False
Because of their large scale level of production, pure monopolists over-allocate resources in their industry by producing beyond the P=MC output
False
Because the ability to influence price, a pure monopolist can increase price and increase volume of sales simultaneously
False
Elasticity of resource demand is measured by dividing "percentage change in resource price" by "percentage change in resource quantity
False
In a purely competitive industry competition centers more on advertising and sales promotion than on price
False
In maximizing a profit a firm will always produce that output where total revenues are at a maximum
False
In the long run a pure monopolist must produce at that output where average total cost is at a minimum
False
In the long run monopolistically competitive firms make normal profits because they are forced to operate at the minimum point on their average total cost curve
False
In the short run a competitive firm will always choose to shut down if product price is less than the lowest attainable average total cost
False
In the short run a pure monopolist will charge the highest price the market will bear for its product
False
In the short run a pure monopolist will maximize profits by producing at that level of output where the difference between price and average total cost is at a maximum
False
Labor market discrimination increases the size of the nation's Gross Domestic Product
False
Majority voting assures that government will provide a public good if it yields total benefits in excess of total cost
False
Monopolistically competitive firms are inefficient because they produce at a point on the rising segment of their average cost curves
False
Monopolistically competitive sellers produce efficiently because they obtain normal profits in the long run
False
Monopolistically competitive sellers realize economic profits in the long run because entry barriers are significant
False
Price discrimination is illegal in the United States under the antitrust regulations
False
Price discrimination occurs every time a firm sells a good for two different prices
False
Producers should hire resources until the total output of each is equal
False
Pure monopolists always earn economic profits
False
Sales taxes are proportional in relation to income because the same tax rate applies regardless of the size of a purchase
False
Society's optimal amount of pollution abatement is where society's marginal benefit of abatement is zero
False
Technological progress in the health care industry has typically reduced costs and increased supply
False
The benefits-received principle of taxation is used to support corporate and personal income taxes
False
The benefits-received principle of taxation supports the case for highly progressive taxation
False
The closer to the Lorenz curve is to the diagonal, the greater is the degree of income inequality
False
The demand curve for a purely competitive industry is perfectly elastic, but the demand curves faced by individual firms in such an industry are downsloping
False
The market structure "oligopoly" includes industries with one or a small number of firms
False
The monopolistically competitive seller equates price and marginal cost in maximizing profits
False
The monopolistically competitive seller maximizes profits by equating price and marginal cost
False
The optimal (economically-efficient) level of air pollution is zero emissions
False
The regulation of natural monopolies has been criticized because it creates a tendency for regulated firms to use too much labor and too little capital in the production process
False
The supply of loanable funds is perfectly elastic
False
The top 20 percent of the US income earners receive nearly 80 percent of total US income
False
Unlike most demand curves, the demand curve for loanable funds is upsloping
False
A firm should reduce its employment of a resource whose marginal resource cost exceeds its marginal revenue product
True
A highly progressive tax takes relatively more from the rich than it does from the poor
True
After all long-run adjustments have been completed, a firm in a competitive industry will produce that level of output where average total cost is at a minimum
True
An improvement in the technology of pollution control is likely to increase society's optimal amount of pollution abatement
True
Because the equilibrium position of a purely competitive seller entails an equality of price and marginal costs, competition produces up to an efficient allocation of economic resources
True
Demand is the active and supply the passive determinant of land rent
True
Different rents on land reflect differences in the marginal revenue productivity of land
True
Generally speaking, the larger the number of firms in an ologopolistic industry, the more more difficult it is for those firms to collude
True
If the XYZ company can sell 4 units per week at $10 per unit and 5 units per week at $9 per unit, the marginal revenue of the fifth unit is $5
True
If three or four homogeneous oligopolists collude, the resulting price and production outcomes will be similar to those of pure monopoly
True
If you pay $1,000 tax on $10,000 of taxable income and $3,000 tax on a taxable income of $16,000 the tax is progressive
True
It will be profitable for a firm to hire additional units of any resource up to the point at which its MRP is equal to its MRC
True
Marginal cost is a measure of the alternative goods in which society forgoes in using resources to produce an additional unit of some specific product
True
Marginal revenue is the addition to total revenue resulting from the sale of one more unit of output
True
Price and marginal revenue are identical for an individual purely competitive seller
True
States permit electric utilities to enjoy monopoly status but try to regulate them so that the competitive outcome is attained
True
The MRP of labor curve is the labor demand curve
True
The U.S. breakfast cereal industry is an example of a differentiated oligopoly
True
The U.S. steel industry is an example of homogeneous oligopoly
True
The basic function of profits and losses is to allocate society's scarce resources to their highest valued uses
True
The demand curve of a monopolistically competitive producer is less elastic than that of a purely competitive producer
True
The demand for a resource depends on its productivity and the market value of the product it is producing
True
The interest rate is the price paid for the use of money
True
The larger the number of firms and the less degree of product differentiation, the greater will be the elasticity of a monopolistically competitive seller's demand curve
True
The marginal revenue product curve of a purely competitive seller declines solely because of the law of diminishing returns
True
The total revenue curve of a competitive seller graphs as a straight, up-sloping line
True