Economics Final
Which factor could contribute to a firm experiencing economies of scale?
productivity gains from more specialized labor
Use the following graph for a profit-maximizing pure monopoly to answer the next question. At equilibrium, the firm will be generating
an economic profit
Use the following graph for a profit-maximizing pure monopoly to answer the next question. At equilibrium, the firm will be generating
an economic profit
The reason the marginal cost curve eventually increases as output increases for the typical firm is because of
diminishing marginal returns
In perfect competition, the demand faced by a single firm is perfectly
elastic, because many other firms produce the same standardized product
The demand curve faced by a perfectly competitive firm
is the same as its marginal revenue curve
Answer the next question based on the following payoff matrix for a duopoly in which the numbers indicate the profit in millions of dollars for each firm. If the two firms collude to maximize joint profits, the total profits for the two firms will be
$525 million
Answer the next question on the basis of the following data. The marginal cost associated with the production of the sixth unit of output is
$8
Monetary payments a firm makes to pay for resources are called
explicit costs
Use the following graph showing the average total cost curve for a perfectly competitive firm to answer the next question. At the long-run equilibrium level of output, this firm's total cost
is $400
Use the following graphs for a perfectly competitive market in the short run to answer the next question. Which of the following statements is true?
the firm is generating a loss
Marginal cost can be defined as the change in
total cost resulting from the production of an additional unit of output
Use the following table, which shows the demand schedule faced by Ninaskets, a pure monopoly selling baskets, to answer the next question What is the change in total revenue if the pure monopoly raises the price from $10 to $12?
-$120
The table shows cost data for a perfectly competitive firm. If the market price for the firm's product is $6, what output level will the firm produce to maximize profits?
14
The following table shows cost data for a perfectly competitive firm. If the market price for the firm's product is $180, the firm will produce
7 units and earn economic profits of $238
The lowest point on a perfectly competitive firm's short-run supply curve corresponds to the minimum point on its
AVC curve
The economic incentive for price discrimination is based upon
differences among buyers' elasticities of demand
Which of the following is most likely to be a variable cost of production in the short run?
fuel and power payments
Use the following table to answer the next question. The table shows cost data for a perfectly competitive firm. If the market price for the firm's product is $80, the firm will
produce 4 units to maximize profits
Collusive control over price may permit oligopolists to
reduce uncertainty, increase profits, and possibly limit entry of new firms
The downward-sloping demand curve of a monopolistic competitor
reflects some level of control over its own price
Suppose that the market for corn is perfectly competitive. If corn farmers are currently generating losses, then we would expect that in the long run the market
supply curve will shift to the left
The graphs suggest that in the long run, assuming no changes in the given information, the market
supply curve will shift to the right
Use the following graphs for a perfectly competitive market in the short run to answer the next question. The graphs suggest that in the long run, assuming no changes in the given information, the market
supply curve will shift to the right
In the long run, the economic profits for a monopolistically competitive firm will be
the same as the profits for a purely competitive firm
Assume a perfectly competitive constant-cost industry is initially at long-run equilibrium. Now suppose that a decrease in market demand occurs. After all the long-run adjustments have been completed, the new equilibrium price
will be the same as the initial price, and the output will be less
If the marginal cost curve is above the average total cost curve
average total cost is increasing
Accounting profit equals total revenue minus
explicit costs
Implicit costs are
opportunity costs of using owned resources
If a firm is a price taker, then the demand curve for the firm's product is
perfectly elastic
Mergers of firms in an industry tend to
transform monopolistic competition into oligopoly
Given the data in the table below, what is the short-run profit-maximizing level of output for the perfectly competitive firm?
4 units
Answer the next question based on the demand and cost schedules for a monopolistically competitive firm given in the table below. What output quantity will the monopolistically competitive firm produce to maximize profits?
5
Suppose that TC = $550, TVC = $500, and MC = $100. If the firm produces 10 units of output, then
MC > AVC
Use the following graph showing the demand and marginal revenue curves faced by a pure monopoly to answer the next question. If the pure monopoly wants to sell quantity Q1, it should charge:
P1
The data below relates to a pure monopoly and the product it produces. What is the profit-maximizing output and price for this firm?
P= $14 Q= 4
Use the following graph for a monopolistically competitive firm to answer the next question. The long-run equilibrium price and output for this firm will be
A and D
In long-run equilibrium, a perfectly competitive firm will operate where price is
equal to MR, MC, and the minimum ATC
In perfect competition, each additional unit of output that a firm sells will yield a marginal revenue that is
equal to price
Which of the following is most likely to be an implicit cost for Company X?
forgone rent from the building owned and used by company X
Accounting profit is typically
greater than economic profit because the former does not take implicit costs into account
A nondiscriminating pure monopoly will find that marginal revenue
is less than price
An industry in which the firm's cost structures do not vary with changes in production will have a long-run supply curve that
is perfectly elastic
Use the following graph showing the average total cost curve for a perfectly competitive firm to answer the next question. At the long-run equilibrium level of output, this firm's profit
is zero
A perfectly competitive firm should continue to operate even at a loss in the short run if
it can cover its variable costs of production
Round Things, Inc.'s production process exhibits economies of scale. Currently its long-run average total cost is $1/unit. If Round Things doubles its use of all inputs, its new long-run average total cost will be
less than $1/unit
In many large U.S. cities, taxicab companies operate as near monopolies because of
licenses
An argument for making regulated monopolies adopt competitive prices is that this would
make the marginal cost equal to society's valuation of the marginal benefit
Which is necessarily true for a perfectly competitive firm in short-run equilibrium?
marginal revenue minus marginal cost equals zero
Under monopolistic competition, entry to the industry is
more difficult than under pure competition but not nearly as difficult as under pure monopoly
A nondiscriminating pure monopoly is generally viewed as being
neither productively nor allocatively efficient
Which statement about oligopoly is false?
prices in oligopoly are predicted to fluctuate widely and frequently
Which idea is inconsistent with perfect competition?
product differentiation
Which is a feature of a perfectly competitive market?
products are standardized or homogeneous
Which of the following is not a barrier to entry in an industry?
profit maximization
Informal collusion to restrict output and increase prices is sometimes referred to as a
tacit understanding
Use the following graph for a perfectly competitive firm to answer the next question. The firm's short-run supply curve is
the "bcd" segment and above on the MC curve
A constant-cost industry is one in which
the long-run supply is perfectly elastic
Use the following table to answer this question, which provides information on the production of a product that requires one variable input. Diminishing marginal returns set in with the addition of the
third unit of input
A monopolistically competitive firm is producing at an output level in the short run where average total cost is $4.50, price is $4, marginal revenue is $2.50, and marginal cost is $2.50. This firm is operating
with a loss
The diagram shows the short-run average total cost curves for five different plant sizes of a firm. If in the long run the firm should produce output 0x, it should do it with a plant of size
#2
If you know that total fixed cost is $200, total variable cost is $600, and total product is 4 units, then average total cost must be
$200
Use the following graph showing cost curves for a perfectly competitive firm to answer the next question What is the lowest price at which the firm will start producing output in the short run?
$0.60
Answer the next question based on the following payoff matrix for a duopoly in which the numbers indicate the profit in thousands of dollars for a high-price or a low-price strategy. If both firms collude to maximize joint profits, the total profits for the two firms will be
$1,250,000
If you owned a small farm, which of the following would most likely be a fixed cost of production in the short run?
hail insurance
Use the following table to answer the next question. Plant sizes get larger as you move from Plant 1 to Plant 4. In the long run, the firm should use Plant 3's size for what level of output?
4,000 to 4,500 units
Use the following graph for a pure monopoly operating in the short-run to answer the next question. In order to maximize profits, this firm should charge a price of
0B
Use the following graph to answer the next question. What is the profit-maximizing quantity of output for this pure monopoly?
0B
Use the following graph for a profit-maximizing pure monopoly to answer the next question. The firm will produce the quantity
0V
A successful advertising campaign by the firm will cause its demand curve to shift from Chart with lines A and B
A to B and become less elastic
Use the following graph to answer the next question. A short-run equilibrium that would produce losses for a monopolistically competitive firm would be represented by graph
D
If the government regulated the pure monopoly and made it produce the level of output that would achieve allocative efficiency, what price and quantity of output levels would we observe in the short run?
P2 and Q3
Use the following table to answer the next question. Based on the cost data given, which of the following price-quantity tables correctly represents the firm's short-run supply schedule?
Table (2)
Under what conditions would an increase in market demand lead to the same long-run equilibrium price?
The firms in the market are part of a constant-cost industry
Use the following graph to answer the next question. Given the graph above, which level of output should the perfectly competitive firm choose?
X3, since any price increase in output beyond that point will reduce profits
A perfectly competitive producer is
a "price taker"
At equilibrium, the firm will be generating
an economic profit
Assume that you are the owner of a small bakery in your home town. Which of the following would be a variable cost of production in the short run?
baking supplies (flour, salt, etc.)
Mutual interdependence means that a firm's
behavior is affected by other firms' actions
If the marginal cost curve is below the average variable cost curve
both average total cost and average variable cost are decreasing
Productive efficiency refers to
cost minimization, where P = minimum ATC
Average fixed cost
declines continually as output increases
The larger the diameter of a natural gas pipeline is, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of one reason for
economies of sale
A decrease in the long-run average total cost as output increases is due to
economies of scale
The ability of Intel to spread product development cost over a larger number of units of output arises from
economies of scale
Use the following graph for a monopolistically competitive firm in a constant-cost industry to answer the next question. This firm is
in short-run equilibrium, but not long-run equilibrium
Use the following graph for a monopolistically competitive firm in a constant-cost industry to answer the next question. This firm is
in short-run equilibrium, but not long-run equilibrium
This firm has a U-shaped
marginal cost curve
Excess capacity implies
productive inefficiency
Graph is shown What is the difference between the perfectly competitive equilibrium level of output and the pure monopoly equilibrium level of output? 110-90
20 units
Assume the price of a product sold by a perfectly competitive firm is $5. Given the data in the accompanying table, at what output level is total profit highest in the short run?
40
In the short run, total output in an industry
can vary as the result of using a fixed amount of plant and equipment more or less intensively
The price elasticity of a monopolistically competitive firm's demand curve varies
directly with the number of competitors but inversely with the degree of product differentiation
The demand curve faced by a pure monopoly is
downward sloping
If a firm's total revenue just covers its implicit and explicit costs of production, then
economic profit is zero
Pure monopolies are said to be allocatively inefficient because
price is greater than marginal cost
The market price of the product in the short run is
$40
The potential problem with competitive pricing regulation of a natural monopoly is that
P<ATC
The curves suggest that this is
a constant-cost industry
Use the following table to answer the next question The marginal revenue generated by the pure monopoly from selling the third unit of output is
$3
Use the following table to answer the next question and assume that the total fixed cost incurred by the firm is $500. The total cost associated with the production of 5 units of output is
$2,500
The following table shows cost data for a perfectly competitive firm If the market price for the firm's product is $180, the firm will produce
7 units and earn economic profits of $238
The letters A, B, and C designate three successively larger plant sizes. In the long run, the firm should use plant size "C" for the production of
80 to 100 units of output
Use the following data to answer the next question. The letters A, B, and C designate three successively larger plant sizes. In the long run, the firm should use plant size "C" for the production of
80 to 100 units of output
For a pure monopoly to sell a quantity of 10 units, the price must be $8. Marginal revenue (MR) at this output level will be
< $8
Use the following graph for a monopolistically competitive firm to answer the next question. The long-run equilibrium price and output for this firm will be
A and D
Use the following graph for a monopolistically competitive firm to answer the next question. A successful advertising campaign by the firm will cause its demand curve to shift from
A to B and become less elastic
If marginal cost exceeds average total cost in the short run, then which is likely to be true?
Average total cost is increasing
Use the following graph for a profit-maximizing pure monopoly to answer the next question. The firm will set its price at
OJ
At what price would the firm generate the same profit or loss whether it chooses to produce or not?
P3
Use the following graph showing the demand and marginal revenue curves faced by a pure monopoly to answer the next question. What price should the pure monopoly charge in order to maximize total revenue?
P3
Use the following graph for a profit-maximizing pure monopoly to answer the next question. At equilibrium, the firm will be generating
an economic profit
Answer the next question on the basis of the following demand and cost data faced by a pure monopoly. At equilibrium, the pure monopoly will generate
an economic profit of $6.50
Answer the next question on the basis of the following demand and cost data faced by a pure monopoly. At equilibrium, the pure monopoly will generate
an economic profit of $6.50
If monopolistically competitive firms in an industry are making an economic profit, then new firms will enter the industry and the product demand facing existing firms will
decrease
A firm sells a product in a perfectly competitive market. The marginal cost of the product at the current output level of 500 units is $1.50. The minimum possible average variable cost is $1. The market price of the product is $1.25. To maximize profits, the firm should
decrease production to less than 500 units
Which set of characteristics below best describes the basic features of monopolistic competition?
easy entry, many firms, and differentiated products
Answer the next question based on the following payoff matrix for a duopoly in which the numbers indicate the profit in millions of dollars for each firm. Assume that firm B adopts a low-price strategy while firm A maintains a high-price strategy. Compared to the results from a high-price strategy for both firms, firm B will now
gains $75 million in profit and firm A will lose $50 million in profit
Suppose that a pure monopoly calculates that at its present output level, marginal revenue is $1 and marginal cost is $2. The monopoly could maximize profits or minimize losses by
increasing price an decreasing output
When a firm is experiencing economies of scale
long-run average total cost is decreasing
Price discrimination is more common in service industries because
low price buyers will find it virtually impossible to resell the products of such industries to high price buyers
Use the following graph for a perfectly competitive firm to answer the next question. At its short-run equilibrium point, the firm's
marginal revenue equals its average total cost
Many people believe that pure monopolies charge any price they want to without affecting sales. Instead, the output level for a profit-maximizing pure monopoly occurs where
marginal revenue equals marginal cost
In the long run, a firm will choose a plant size that has the
minimum average total cost of producing its target level of output
Given a downward-sloping linear demand curve, if total revenue decreases as quantity of output increases, marginal revenue must be
negative and demand is inelastic
In an oligopolistic market there is likely to be
neither allocative nor productive efficiency
Use the following graphs for a perfectly competitive market in the short run to answer the next question. The graphs suggest that in the long run, assuming no changes in the given information,
new firms will enter the industry
Which of the following is true under conditions of perfect competition?
no single firm can influence the market price
A pure monopoly may generate economic profits because
of barriers to entry
Answer the next question based on the demand and cost schedules for a monopolistically competitive firm given in the table below. At the profit-maximizing level of output, marginal revenue is
$4
Use the table below to answer the next question for a perfectly competitive firm. The marginal revenue generated from the third unit of output is
$40
Use the table below to answer the next question for a perfectly competitive firm. The market price of the product in the short run is
$40
If the two firms collude to maximize joint profits, the total profits for the two firms will be matrix with firm A and B
$525 million
Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10% interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 each. Of the $75, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. The explicit costs of Harvey's firm in the first year were
$605,000
At the profit-maximizing level of output for a pure monopoly
price is greater than marginal cost
The short-run supply curve for a perfectly competitive firm is the
segment of the MC curve lying at and above the AVC curve
Use the following graphs for a perfectly competitive market in the short run to answer the next question. The graphs suggest that in the long run, as automatic market adjustments occur, the demand faced by the perfectly competitive firm will
shift down
Suppose some firms exit an industry characterized by monopolistic competition. We would expect the demand curve of a firm already in the industry to
shift to the right
Use the following graphs for a perfectly competitive market in the short run to answer the next question. The graphs suggest that in the long run, assuming no changes in the given information, the market
supply curve will shift to the right
A perfectly competitive firm will be willing to produce even at a loss in the short run, as long as
the loss is smaller than its total fixed costs
One argument for having the government regulate natural monopolies is that without regulation
these monopolies produce at a level where price is greater than marginal cost
Economic profit is equal to
total revenue minus the explicit and implicit costs of production
The representative firm in a perfectly competitive industry
will earn a normal profit in the long run
The table shows short-run average total cost schedules for three plants of different sizes that a firm might build in the long run. What is the long-run average total cost of producing 30 units of output?
$7
The marginal cost associated with the production of the sixth unit of output is Output 6 Total Cost $69
$8
Answer the next question on the basis of the following data. The average fixed cost of producing 3 units of output is.
$8.00
the average fixed cost of producing 3 units of output is Output 3 Total Cost $48
$8.00
Answer the next question on the basis of the following data. The average variable cost of producing 3 units of output is
$9.33
The average variable cost of producing 3 units of output is
$9.33
Answer the next question on the basis of the following demand and cost data for a specific firm. If columns 1 and 3 are this firm's demand schedule, then economic profit will be
$90
The long-run perfectly competitive equilibrium
results in normal profits
Use the following graph for a monopolistically competitive firm to answer the next question. Marginal revenue and marginal cost intersect at point
a
A cartel is
a formal agreement among firms to collude
In long-run equilibrium, a profit-maximizing firm in a monopolistically competitive industry will produce the quantity of output where
ATC = P MR=MC < P
A pure monopoly most likely results in productive inefficiency because at the profit-maximizing level of output
ATC is not at its minimum level
Use the following graph to answer the next question. If the industry were served by a pure monopoly, the profit-maximizing price and quantity of output would be
P3 Q1
Use the following graph showing short-run cost curves for a perfectly competitive firm to answer the next question. At what price would the firm earn a normal profit and break even?
P4
If the economic profit generated by a firm is zero and its implicit costs are greater than zero, then
accounting profit is greater than zero
Use the following graph for a perfectly competitive firm generating a loss in the short run to answer the next question. Which of the following market changes would allow the firm to earn an economic profit?
an increase in market demand
The main difference between the short run and the long run is that
in the short run, some inputs are fixed and some are variable
A perfectly competitive firm can be identified by the fact that
its average revenue equals its marginal revenue
Which of the following would be an implicit cost for a firm?
the cost of wages foregone by the owner of the firm
Suppose that a firm produces 200,000 units a year and sells them all for $10 each. The explicit costs of production are $1,500,000 and the implicit costs of production are $300,000. The firm earns an accounting profit of __________ and an economic profit of __________.
$500,000 $200,000
If the short-run average variable cost of production for a firm is decreasing, then it follows that
average variable cost must be greater than marginal cost
Which of the following constitutes an implicit cost to the Asarta Manufacturing Company?
forgone interests income from using savings to pay for operating expenses
One defining characteristic of pure monopoly is that the
monopoly produces a product with no close substitutes
Which characteristic would best be associated with perfect competition?
price takers
If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes
the industry would more closely approximate pure competition
The following table shows cost data for a perfectly competitive firm. If the product price is $290, the per-unit economic profit at the profit-maximizing output is
$119
Use the following graph to answer the next question. If the industry were perfectly competitive, the market price would be
$14
If you know that when a firm produces 10 units of output, total cost is $1,030 and average fixed cost is $10, then total variable cost is
$930
Use the following table, which shows the demand schedule faced by Ninaskets, a pure monopoly selling baskets, to answer the next question. What is the change in total revenue if the pure monopoly raises the price from $10 to $12?
-$120
A pure monopoly can sell 20 toys per day for $8 each. To sell 21 toys per day, the price must be cut to $7. The marginal revenue of the 21st toy is
-$13
Use the following graph to answer the next question. What is the difference between the perfectly competitive equilibrium level of output and the pure monopoly equilibrium level of output?
20 units
Answer the next question on the basis of the following data faced by a perfectly competitive firm. If the firm's minimum average variable cost is $10, the firm's profit-maximizing level of output would be
3
A pure monopoly is not allocatively efficient because at the profit-maximizing level of output
P>MC
Use the following table to answer the next question. Plant sizes get larger as you move from Plant 1 to Plant 4. Which plant size would generate the least average total cost for the 3,000-4,000 level of output?
Plant 2
Which constitutes an obstacle to collusion among oligopolists?
a large number of firms
The monopolistically competitive seller's demand curve will become more elastic with
a larger number of competitors
Which of the following statements is correct?
a perfectly competitive firm is a price taker, while a pure monopoly is a price maker
A nondiscriminating pure monopoly must decrease the price on all units of a product in order to sell more units. This explains why
a pure monopoly's marginal revenue curve is below its demand curve
In the long run
all costs are variable
Fixed costs of production in the short run
cannot be reduced by producing less output
If all resources used in the production of a product are increased by 20% and total output increases by 20%, then the firm must be experiencing
constant returns to scale
The marginal cost associated with the production of the sixth unit of output is
$25.00
Use the following graph to answer the next question. If the industry were a pure monopoly, the profit-maximizing price would be
$16
Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10% interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 each. Of the $75, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. What is the economic profit generated by Extreme Gaming in the first year?
$160,000
Suppose that you could either prepare your own tax return in 15 hours or hire a tax specialist to prepare it for you in 2 hours. You value your time at $11 an hour; the tax specialist will charge you $55 an hour. The opportunity cost of preparing your own tax return is
$165
Which industry would be best characterized as monopolistically competitive?
web designing consulting
Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10% interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 each. Of the $75, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. What is the accounting profit generated by Extreme Gaming in the first year?
$220,000
Use the following graph to answer the next question. This perfectly competitive firm will not produce unless price is at least
$5
Use the following information to answer the next question. Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10% interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 each. Of the $75, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. The explicit costs of Harvey's firm in the first year were
$605,000
Answer the next question on the basis of the following data. The marginal cost associated with the production of the third unit of output is
$7
If you know that when a firm produces 8 units of output, average fixed cost is $12.50 and average variable cost is $81.25, then the total cost associated with this output level is
$750.00
If you know that when a firm produces 10 units of output, total cost is $1,030 and average fixed cost is $10, then total variable cost is 10x$10=100 1030-100=930
$930
Use the following graph for a perfectly competitive firm generating a loss in the short run to answer the next question. Which area in the graph represents the portion of total cost that the firm can recoup by continuing to produce rather than shutting down?
0beg
Use the following table to answer this question, which provides information on the production of a product that requires one variable input. The average product generated with 5 units of the input is
10
If the industry were perfectly competitive, the quantity of output produced would be
160
Use the following graph to answer the next question. The graph shows the cost curves for a perfectly competitive firm. If the market price of the product is $1.25 per unit, then the firm will produce how many units to maximize profits in the short run?
20
The following data show the relationship between total cost and output in the short run. The firm's marginal cost is equal to average total cost somewhere between units
3 and 4
The following data show the relationship between total cost and output in the short run. The firm's marginal cost is equal to average total cost somewhere between units
3 and 4
Use the following table to answer the next question. Plant sizes get larger as you move from ATC-1 to ATC-4. The firm's minimum efficiency scale occurs at what level of output?
3,500 units
Use the following table to answer the next question. Plant sizes get larger as you move from ATC-1 to ATC-4. The firm's minimum efficiency scale occurs at what level of output?
3,500 units
Use the following table to answer the next question. The table shows the total costs associated with varying levels of output produced by a perfectly competitive firm. If the product sells for $1,200 a unit, the firm's profit-maximizing output is
4
If columns 1 and 3 are this firm's demand schedule, the profit-maximizing level of output will be
4 units
Use the following graph to answer the next question. To maximize profits, the perfectly competitive firm should produce output at
C
Use the following figure to answer the next question. Total fixed cost at output level Q2 is measured by the vertical distance
CD
If the firm is maximizing profits in the short run, the amount of economic profit per unit is
EH
Use the following graph for a perfectly competitive firm to answer the next question. If the firm is maximizing profits in the short run, the amount of economic profit per unit is
EH
Interindustry competition refers to the fact that
In some markets the producers of a certain commodity might face competition from products of other industries
In the long-run equilibrium of a monopolistically competitive industry
P > minimum (ATC)
Use the following graph showing the demand and marginal revenue curves faced by a pure monopoly to answer the next question. If the pure monopoly wants to sell quantity Q1, it should charge:
P1
Use the following graph to answer the next question. What is the difference between the perfectly competitive equilibrium level of output and the pure monopoly equilibrium level of output? (P1 P2 P3 P4)
P3
Barriers to entering an industry
are characteristic of a pure monopoly
If the long-run average total cost curve for a firm is horizontal in a relevant range of production, then it indicates that there
are constant returns to scale
Which of the following constitutes an implicit cost to the Asarta Manufacturing Company?
foregone interest income from using savings to pay for operating expenses
Use the following graph for a pure monopoly operating in the short run to answer the next question. At the profit-maximizing level of output, this firm
generates a loss per unit equal to DE
Use the following graphs to answer the next question. The graphs show the long-run average total cost (LRATC) curve for cars. For which graph is the output level Q0 at minimum efficient scale?
graph 1
Answer the next question on the basis of the following demand and cost data for a specific firm. In the long run, the number of firms in this monopolistic competitive industry will most likely
increase
Fixed costs are those costs that are
independent of the amount of output a firm produces in the short run
At long-run equilibrium in monopolistic competition, there is
neither allocative nor productive efficiency
With a natural monopoly, the normal profit price is _________________ and the competitive price is _________________.
not allocatively efficient; allocatively efficient
In which market model is there mutual interdependence?
oligopoly
In perfect competition, if the market price of the product is initially higher than the minimum average total cost faced by the firms, then
other firms will enter the industry and the industry supply will increase
One major barrier to entry under pure monopoly arises from
ownership of essential resources
An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a
patent
If the demand curve faced by an individual firm is perfectly elastic, the firm must be a(n)
perfectly competitive firm
Which phrase would be most characteristic of pure monopoly?
single seller
If a perfectly competitive firm is facing a situation where the price of its product is lower than the average total cost, which of the following statements is true?
the firm is generating a loss and if things are not expected to improve the firm will leave the industry
Which of the following is not a necessary characteristic of a perfectly competitive industry?
the industry or market demand is highly elastic
Use the table below to answer this question, which provides information on the production of a product that requires one variable input. With the addition of the second unit of input, the marginal product is __________ and the average product is __________.
15;10
Use the following graphs for a perfectly competitive market in the short run to answer the next question. What will happen in the long run to market supply and the equilibrium price of the product?
Market supply will decrease and equilibrium price will increase
Suppose that this pure monopoly is subjected to a regulatory commission. If the commission seeks to achieve the most efficient allocation of resources for this industry, it should set the price at
P2
Price is taken to be a "given" by an individual firm selling in a perfectly competitive market because
each producer supplies a negligible fraction of total market
In an oligopolistic market there are
few sellers
The marginal revenue curve faced by a perfectly competitive firm
is horizontal at the market price
When compared with a perfectly competitive market with identical costs of production, a pure monopoly will produce
less output and charge a higher price
The strategy of establishing a price that prevents the entry of new firms is called
limit pricing
A monopolistically competitive firm is operating at a short-run level of output where price is $21, average total cost is $15, marginal cost is $13, and marginal revenue is $13. In the short run this firm should
make no change in the level of output
A rising short-run average variable cost of production for a firm indicates that
marginal cost is above average variable cost
Suppose an increase in market demand occurs in a constant-cost industry. As a result
perfectly competitive firms will eventually enter the industry
Clara produces and sells tomatoes in a perfectly competitive market. This implies that Clara's marginal revenue generated from selling an additional unit of tomatoes is always equal to
price
T-Shirt Enterprises is operating in a perfectly competitive market. It is producing 3,000 t-shirts and selling them for $10 each. At this level of output, the average total cost is $10.50 and the average variable cost is $10.20. Based on these data, the firm should
shut down in the short run
Price discrimination for concessions at ball parks is not applied to adults and children because
there can be exchange of the products from children, ho could try them at a lower price, to adults
