micro 2

According to the figure (fig3), this firm experiences diseconomies of scale at what output levels? A.output levels above N B.output levels between M and N C.output levels below M D.None of the above is correct.

a

According to the figure(fig 6),, when 150 identical firms participate in this market, at what price will 15,000 units be supplied to this market? A.$1.00 B.$1.50 C.$2.00 D.It cannot be determined from the information provided.

a

Average total cost equals A.(fixed costs + variable costs)/quantity produced. B.(fixed costs + variable costs)/change in quantity produced. C.change in total costs/quantity produced. D.change in total costs/change in quantity produced.

a

Average total cost is very high when a small amount of output is produced because A.average fixed cost is large. B.of diminishing marginal product. C.variable costs are spread over only a few units of output. D.All of the above are correct.

a

If a perfectly competitive firm currently produces where price is greater than marginal cost it A.will increase its profits by producing more. B.will increase its profits by producing less. C.is making positive economic profits. D.is making negative economic profits.

a

In a competitive market, the actions of any single buyer or seller will A.have a negligible impact on the market price. B.adversely affect the profitability of more than one firm in the market. C.cause a noticeable change in market production and price. D.have little effect on market production, but ultimately change price.

a

The figure depicts a total cost function for a firm that produces coffee mugs. According to the figure (fig1), which of the statements below concerning production is most consistent with the shape of the total cost curve? A.Producing an additional coffee mug always has a higher cost than producing the previous coffee mug. B.Producing an additional coffee mug is always less costly than producing the previous coffee mug. C.Producing an additional coffee mug always has the same cost as producing the previous coffee mug. D.None of the above is correct for all quantities.

a

The slope of the total product curve reveals information about the A.marginal product of workers. B.average product of workers. C.maximum product of workers. D.total product of workers.

a

When a competitive market experiences an increase in demand that induces an increase in producer costs, which of the following is most likely to arise? A.The long-run market supply curve will be upward sloping. B.The condition of free entry into the market will be violated. C.Producer profits must fall in the long run. D.All of the above are likely to occur.

a

When a perfectly competitive firm makes a decision to shut down, it is most likely that A.price is below the minimum of average variable cost. B.fixed costs exceed variable costs. C.average fixed costs are rising. D.marginal cost is above average variable cost.

a

. The profits of a profit-maximizing firm equal A.P Q. B.(P - ATC) Q. C.(ATC - P) Q. D.(MC - AVC) Q.

b

A profit-maximizing firm making losses (negative profit), but still producing output faces which of the following conditions? A.P > ATC B.P > AVC C.Both of the above are correct. D.Neither of the above is correct.

b

An example of an implicit cost of production would be the A.cost of raw materials for a printing company to print books. B.income an entrepreneur could have earned working elsewhere. C.cost of a delivery truck in a business that rarely makes deliveries. D.All of the above are correct.

b

At all levels of production beyond the point where the marginal cost curve crosses the average variable cost curve, average variable cost A.falls. B.rises. C.does not change. D.All of the above are possible, it depends on the shape of the marginal cost curve.

b

In a perfectly competitive market, the process of entry or exit ends when A.firms are operating with excess capacity. B.firms are making zero economic profit. C.firms experience decreasing marginal revenue. D.price is equal to marginal cost

b

The cost to produce an additional unit of output is the firm's A.average variable cost. B.marginal cost. C.average opportunity cost. D.total productivity cost.

b

The graph depicts the cost structure for a firm in a competitive market According to the graph (fig 4), when price falls from P4 to P1, the firm A.has greater fixed cost at production level Q1 than at Q3. B.is unwilling to produce any output. C.should produce Q1 units of output. D.None of the above is correct.

b

The marginal product of labor can be defined as (where denotes "change") A.profit/labor. B.output/labor. C.labor/total cost. D.labor/output.

b

When firms in an industry have the same cost structure which is not changed by the entry or exit of firms, A.the long-run market supply curve must be upward sloping. B.the long-run market supply curve must be horizontal. C.the long-run market supply curve must be downward sloping. D.We can't tell anything about the shape of the long-run market supply curve.

b

Which of the following costs will be zero if a firm produces zero? A.average cost B.variable cost C.opportunity cost D.All of the above are correct.

b

According to the figure (fig 1), which of the statements below best captures information about the underlying production function? A.Output increases at an increasing rate with additional units of input. B.Output decreases at an increasing rate with additional units of input. C.Output increases at a decreasing rate with additional units of input. D.Output decreases at a decreasing rate with additional units of input.

c

According to the figure (fig 2), this particular firm is necessarily experiencing increasing marginal product when line A.B is falling. B.C is falling. C.D is falling. D.None of the above is correct.

c

According to the figure (fig 6), if there are 200 identical firms in this market, what level of output will be supplied to the market when price is $2.00? A.10,000 B.20,000 C.40,000 D.It cannot be determined from the information provided.

c

According to the figures (fig 7), if the market starts in equilibrium at point C in panel (b), a decrease in demand will ultimately lead to A.a higher price. B.a new long-run equilibrium at point D in panel (b). C.fewer firms in the market. D.All of the above are correct.

c

According to the graph (fig 4), when price falls from P4 to P3, the firm finds that A.average revenue exceeds marginal revenue at a production level of Q3. B.profits are greater than zero at Q3. C.profits are maximized at a production level of Q3. D.All of the above are correct.

c

Diminishing marginal product of labor would arise when A.workers are discouraged about the lack of help from other workers. B.only new workers are trained in using the most productive capital. C.crowded office space reduces the productivity of new workers. D.union workers are told to reduce their work effort in preparation for a new round of collective bargaining talks.

c

Economies of scale arise when A.an economy is self-sufficient in production. B.individuals in a society are self-sufficient. C.workers are able to specialize in a particular task. D.fixed costs are large relative to variable costs.

c

In the long run, a profit-maximizing firm will choose to exit a market when A.fixed costs exceed sunk costs. B.average fixed cost is rising. C.revenue from production is less than total costs. D.marginal cost exceeds marginal revenue at the current level of production.

c

The figure depicts average total cost functions for a firm that produces automobiles. According to the figure (fig 3), suppose the firm currently operates on the minimum of ATCB. If it increases production, but not all the way to N, then short-run average total cost A.and long-run average total cost increase. B.and long-run average total cost decrease. C.rises and long-run average total cost is unchanged. D.is unchanged and long-run average total cost increases.

c

The figure depicts the cost structure of a profit-maximizing firm in a competitive market. According to the figure (fig 5), which line segment best reflects the long-run supply curve for this firm? A.AB B.BC C.CD D.None of the above, the long-run supply curve requires knowledge of the average variable cost structure.

c

The figure reflects information about the cost structure of a firm. According to the figure (fig 2), which of the lines is most likely to represent average total cost? A.A B.B C.C D.D

c

When firms have an incentive to exit a competitive market, their exit will A.drive down market prices. B.drive down profits of existing firms in the market. C.decrease the quantity of goods supplied in the market. D.All of the above are correct.

c

Which of the following is a characteristic of a perfectly competitive market? A.Firms are price setters. B.There are few sellers in the market. C.Firms can exit and enter the market freely. D.All of the above are correct.

c

According to the competitive firm table shown (table 1), at a production level of 4 units which of the following is true? A.Fixed cost is zero. B.Marginal cost is $6. C.Total revenue is less than variable cost. D.Marginal revenue is less than marginal cost.

d

According to the competitive firm table shown (table 1), if this firm chooses to maximize profit, it will choose a level of output where marginal cost is equal to A.1. B.3. C.5. D.6.

d

According to the figure (fig 2), which of the lines is most likely to represent marginal cost? A.A B.B C.C D.D

d

According to the figures (fig 7), when a firm in a competitive market, like the one depicted in panel (a), observes market price rising from P1 to P2, it is most likely the result of A.entrance of new firms into the market. B.the exit of existing firms in the market. C.an increase in market supply from Supply0 to Supply1. D.an increase in market demand from Demand0 to Demand1.

d

If all incumbent firms and all potential firms have the same cost curves and the market is characterized by free entry and exit, the long-run market supply curve A.is equal to the sum of marginal cost curves. B.slopes downward. C.slopes upward. D.is horizontal.

d

If marginal cost is less than marginal revenue A.the firm must be experiencing losses. B.the firm must be earning a profit. C.the firm must be maximizing profits. D.a profit-maximizing firm should increase the level of production.

d

If marginal cost is rising A.average total cost must be falling. B.average fixed cost must be rising. C.marginal product must be rising. D.marginal product must be falling.

d

If we assume that marginal product of labor is always decreasing, average total cost A.and average fixed cost are always falling. B.and average fixed cost are always U-shaped. C.and average fixed cost are always rising. D.is U-shaped and average fixed cost is always falling.

d

When a factory is operating in the short run, A.it cannot alter variable costs. B.total cost and variable cost are usually the same. C.average fixed cost rises as output increases. D.it cannot adjust the quantity of some inputs.

d

When a profit-maximizing firm's fixed costs are considered sunk in the short run it A.will never show losses. B.can set price above marginal cost. C.maximizes profit by choosing an output level where price exceeds marginal cost. D.can safely ignore fixed costs when deciding how much to produce.

d