EXAM 5 Micro

The marginal cost curve is generally ______________, because diminishing marginal returns implies that additional units are ________________________. A. downward-sloping; more costly to produce B. upward-sloping; more costly to produce C. downward-sloping; less costly to produce D. upward-sloping; less costly to produce

B. upward-sloping; more costly to produce

According to the definition of profit, if a profit-maximizing firm will always attempt to produce its desired level of output at the lowest possible cost, then it will do so regardless of what type of competition exists in a market. take a long-run perspective on costs, when such costs cannot be adjusted. take a short-run perspective on labor costs which cannot be immediately changed. breakdown its cost structure according to short-run adjustments.

do so regardless of what type of competition exists in a market.

Economies of scale may arise from all but one of the following. Which one is it? doubling promotional expenses to expand sale more than proportionately having a larger retail space can expand sales more than proportionately spreading the fixed-costs of administration over more customers holds average costs down government economic subsidies protect firms from competition to avoid losses.

government economic subsidies protect firms from competition to avoid losses.

Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it? physical space for the gallery costs of purchasing art work to sell in the gallery wages paid to three part-time employees accountant's fees for preparing tax returns

physical space for the gallery

Refer to the graph shown above. Based on the information illustrated in the graph, which of the following is correct? marginal cost line must intersect the average cost line at the middle point of the average cost curve marginal cost of production is below the average cost for producing previous units producing one more unit is reducing average costs overall producing a marginal unit is increasing average costs overall

producing a marginal unit is increasing average costs overall

Refer to the table below. If this information were used to create a total cost graph, the curve should begin at 40 on the vertical axis and slope upward. become steeper as quantity increases. become steeper due to diminishing returns. reflect all of the above.

reflect all of the above.

If a comparison between average cost and price reveals whether a firm is earning profits, then a comparison between average variable cost and price reveals that if the market price exceeds average cost, profits will be positive. that if the market price is below average cost, then profits will be negative. total revenues are the quantity produced multiplied by the price. whether the firm is earning profit if fixed costs are left out of the calculation.

whether the firm is earning profit if fixed costs are left out of the calculation.

Approximately what percentage of the US labor force is employed by firms that have fewer than 100 employees? 63% 50% 45% 35% `

35%

In order to determine ____________, the firm's total costs must be divided by the quantity of its output. diminishing marginal returns fixed costs variable cost average cost

average cost

A situation where the level of output, scale and average costs are all rising is called decreasing returns to scale diseconomies of scale diminishing returns to scale both a and b are correct

both a and b are correct

If a solar panel manufacturer wants to look at its total costs of production in the short run, which of the following would provide a useful starting point? divide total costs into two categories: variable costs that can't be changed in the short run and fixed costs that can be divide the total costs of production by the quantity of output divide the variable costs of production by the quantity of output divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be

divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be

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, variable costs; are constantly changing, fixed costs; are consistently changing, variable costs; do not change,

fixed costs; do not change,

The graph above illustrates the electricity market. Consider market competition between firms where price is based on AR and select the most appropriate answer. in the short-run, the demand curve and average revenue shift as other firms enter the market and increase competition in the short-run, the demand curve and average revenue shift as other firms leave the market and decrease competition in the long-run, the demand curve and average revenue shift as other firms enter the market and increase competition in the long-run, the demand curve and average revenue shift as other firms leave the market and decrease competition

in the long-run, the demand curve and average revenue shift as other firms enter the market and increase competition

Fixed costs are important because, at least in the ___________, the firm _______________. long run; cannot alter them short run; cannot alter them long run; can alter them short run; can alter them

short run; cannot alter them

The ______________ of all firms can be broken down into some common underlying patterns. total revenues diminishing short-run costs cost structure diminishing long-run costs

cost structure

In economics, a firm that faces no competitors is referred to as _________________. an oligopoly a monopoly a perfect competitor an oligopolizor

monopoly

_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price. Total revenue Total profits Average profit margin Total cost

total revenue`

______________ include all of the costs of production that increase with the quantity produced. Fixed costs Variable costs Average costs Average variable costs

Variable costs

Which of the following should typically be ignored because spending has already been made and cannot be changed? variable costs sunk costs marginal costs average marginal cost

sunk costs

In order to determine the average variable cost, the firm's variable costs are divided by _______________________. its' fixed costs the quantity of output its' average costs diminishing marginal costs

the quantity of output