Microeconomics Final

Ayesha, a baker of apple pies, can make a pie from one pound of apples and one hour of paid labor. Apples are $5/pound and labor is $2/hour. She can bake up to 50 pies per day in an oven she rents for $100 per day, in a one-year lease. Each pie sells for $8. Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 What are the total fixed costs when 50 pies are produced?

$100

Entrepreneur's Alternative Salary: $50,000 Lease Payment: $22,000 Revenue: $380,000 Labor Costs: $120,000 Utilities: $8,000 Personal Funds Invested: $100,000 (withdrawn from account earning 6% interest) Number of Units Produced: 1000 Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 How much are the accounting costs?

$150,000

Entrepreneur's Alternative Salary: $50,000 Lease Payment: $22,000 Revenue: $380,000 Labor Costs: $120,000 Utilities: $8,000 Personal Funds Invested: $100,000 (withdrawn from account earning 6% interest) Number of Units Produced: 1000 Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 How much is the economic profit?

$174,000

Entrepreneur's Alternative Salary: $50,000 Lease Payment: $22,000 Revenue: $380,000 Labor Costs: $120,000 Utilities: $8,000 Personal Funds Invested: $100,000 (withdrawn from account earning 6% interest) Number of Units Produced: 1000 Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 How much are the variable costs?

$178,000

Entrepreneur's Alternative Salary: $50,000 Lease Payment: $22,000 Revenue: $380,000 Labor Costs: $120,000 Utilities: $8,000 Personal Funds Invested: $100,000 (withdrawn from account earning 6% interest) Number of Units Produced: 1000 Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 What is the average total cost?

$206

Entrepreneur's Alternative Salary: $50,000 Lease Payment: $22,000 Revenue: $380,000 Labor Costs: $120,000 Utilities: $8,000 Personal Funds Invested: $100,000 (withdrawn from account earning 6% interest) Number of Units Produced: 1000 Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 How much are the economic costs?

$206,000

Entrepreneur's Alternative Salary: $50,000 Lease Payment: $22,000 Revenue: $380,000 Labor Costs: $120,000 Utilities: $8,000 Personal Funds Invested: $100,000 (withdrawn from account earning 6% interest) Number of Units Produced: 1000 Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 How much is the accounting profit?

$230,000

Entrepreneur's Alternative Salary: $50,000 Lease Payment: $22,000 Revenue: $380,000 Labor Costs: $120,000 Utilities: $8,000 Personal Funds Invested: $100,000 (withdrawn from account earning 6% interest) Number of Units Produced: 1000 Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 How much are the fixed costs?

$28,000

Ayesha, a baker of apple pies, can make a pie from one pound of apples and one hour of paid labor. Apples are $5/pound and labor is $2/hour. She can bake up to 50 pies per day in an oven she rents for $100 per day, in a one-year lease. Each pie sells for $8. Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 What are the total variable costs when 50 pies are produced?

$350

Entrepreneur's Alternative Salary: $50,000 Lease Payment: $22,000 Revenue: $380,000 Labor Costs: $120,000 Utilities: $8,000 Personal Funds Invested: $100,000 (withdrawn from account earning 6% interest) Number of Units Produced: 1000 Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 What is the price?

$380

Ayesha, a baker of apple pies, can make a pie from one pound of apples and one hour of paid labor. Apples are $5/pound and labor is $2/hour. She can bake up to 50 pies per day in an oven she rents for $100 per day, in a one-year lease. Each pie sells for $8. Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 What is the revenue if 50 pies are sold?

$400

Ayesha, a baker of apple pies, can make a pie from one pound of apples and one hour of paid labor. Apples are $5/pound and labor is $2/hour. She can bake up to 50 pies per day in an oven she rents for $100 per day, in a one-year lease. Each pie sells for $8. Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 What are total costs if 50 pies are sold?

$450

Entrepreneur's Alternative Salary: $50,000 Lease Payment: $22,000 Revenue: $380,000 Labor Costs: $120,000 Utilities: $8,000 Personal Funds Invested: $100,000 (withdrawn from account earning 6% interest) Number of Units Produced: 1000 Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 How much are the implicit costs?

$56,000

Ayesha, a baker of apple pies, can make a pie from one pound of apples and one hour of paid labor. Apples are $5/pound and labor is $2/hour. She can bake up to 50 pies per day in an oven she rents for $100 per day, in a one-year lease. Each pie sells for $8. Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 What is the marginal cost of one pie?

$7

Ayesha, a baker of apple pies, can make a pie from one pound of apples and one hour of paid labor. Apples are $5/pound and labor is $2/hour. She can bake up to 50 pies per day in an oven she rents for $100 per day, in a one-year lease. Each pie sells for $8. Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 What is the average total cost of 50 pies?

$9

Ayesha, a baker of apple pies, can make a pie from one pound of apples and one hour of paid labor. Apples are $5/pound and labor is $2/hour. She can bake up to 50 pies per day in an oven she rents for $100 per day, in a one-year lease. Each pie sells for $8. Use the above information. Answer in this format: $ before your answer and commas to separate - example: $9,999 What is the profit if 50 pies are sold?

-$50

Ayesha, a baker of apple pies, can make a pie from one pound of apples and one hour of paid labor. Apples are $5/pound and labor is $2/hour. She can bake up to 50 pies per day in an oven she rents for $100 per day, in a one-year lease. Each pie sells for $8. How many pies should the firm produce in the long-run? (Enter an integer number to answer.)

0

Ayesha, a baker of apple pies, can make a pie from one pound of apples and one hour of paid labor. Apples are $5/pound and labor is $2/hour. She can bake up to 50 pies per day in an oven she rents for $100 per day, in a one-year lease. Each pie sells for $8. How many pies should the firm produce in the short-run? (Enter an integer number to answer.)

50

Which of the following statements is correct? : A. A cartel is usually a formal agreement among oligopolists that sets product price and determines each firm's market share. B. Collusion among firms is legal. C. While collusion isn't legal in the United States, cartels are. D. All oligopolists heavily advertise their products.

A. A cartel is usually a formal agreement among oligopolists that sets product price and determines each firm's market share.

What are laws aimed at promoting competition among firms called? A. Antitrust laws. B. Collusion. C. Laws of comparative advantage. D. Merger legislation.

A. Antitrust laws

Economies of scale help determine the extent of: A. Competition in an industry B. Product differentiation in an industry C. Product innovation in an industry D. Market failure in an industry

A. Competition in an industry

Refer to the table below. Which of the following are not economic costs? Paper $20,000 Wages $48,000 Lease payment for copy machines $10,000 Electricity $6,000 Lease payment for store $24,000 Foregone Salary $30,000 Forgone Interest $3,000 Total $141,000 A. Everything listed in the table is an economic cost. B. The payments for paper, wages, and electricity. C. The lease payments. D. The foregone salary and interest.

A. Everything listed in the table is an economic cost.

Which of the following are characteristics of monopolistic competition? A. Firms sell similar, but not identical, products. B. There are high barriers to entry. C. All of these. D. Few firms compete.

A. Firms sell similar, but not identical, products.

In which of the following cases is the firm's demand curve the same as the market demand for the product? A. In the monopoly's case .B. All of the above. C. In the monopolistically competitive case. D. In the perfectly competitive case.

A. In the monopoly's case

Which of the following is not a barrier to entry? A. None of the above. All of the above are barriers to entry. B. Patents. C. Economies of scale. D. Ownership of a key input

A. None of the above. All of the above are barriers to entry.

Which of the following is correct for a monopolistically competitive firm in long-run equilibrium? A. P = ATC B. MC = ATC C. P = MC D. MC exceeds MR

A. P = ATC

Please select the type of market structure for the following good or service: Trucking A. Perfect Competition B. Monopolistic Competition C. Oligopoly D. Monopoly

A. Perfect Competition

Which is an important antitrust law? A. The Sherman Act. B. The Peabody Act. C. The Competitive Legal Framework. D. The Hatch Act.

A. The Sherman Act.

What do antitrust laws have to do with economic efficiency? A. They promote economic efficiency. B. They harm economic efficiency. C. They guarantee economic efficiency. D. They don't affect economic efficiency.

A. They promote economic efficiency.

Answer the next question(s) on the basis of the following information:TC = total costQ = quantity of outputMC = marginal costMarginal cost is: A. change in TC / change in Q B. (change in TC) / Q C. Q / change in Q D. TC / change in Q

A. change in TC / change in Q

A significant benefit of monopolistic competition compared with pure competition is: A. greater product variety. B. more sellers C. more economies of scale. D. more competition

A. greater product variety.

If price is less than the average variable cost, a firm that continues to produce in the short run A. incurs a loss that is greater than its fixed costs B. cannot cover any of its variable costs. C. can cover its variable costs but not its total costs. D. can cover all of its fixed costs and some of its variable costs.

A. incurs a loss that is greater than its fixed costs

In which of these continuums of degrees of competition (most competitive to least competitive) is oligopoly properly placed? A. perfect competition, oligopoly, monopoly B. monopoly, oligopoly, perfect competition C. oligopoly, perfect competition, monopoly D. perfect competition, monopoly, oligopoly

A. perfect competition, oligopoly, monopoly

Which of the following is the best example of a perfectly competitive producer? A. the average corn farmer in Illinois B. Taco Bell restaurant C. Ford Motors D. UPS

A. the average corn farmer in Illinois

In the broad sense, "interdependence" refers to the decisions of firms in industries where the profits of each firm depend on: A. the firm's interactions with other firms B. the ability to achieve a dominant position in the industry C. agreements among firms to charge the same price D. the ability of a firm to set up barriers to entry

A. the firm's interactions with other firms

Children are charged less than adults for admission to professional baseball games but are charged the same prices as adults at the concession stands. This pricing system occurs because: A. the seller can prevent children from buying game tickets for adults but cannot prevent children from buying concession items for adults. B. children have an inelastic demand for game tickets but an elastic demand for concession items. C. children can personally "consume" only a single game ticket, but can personally consume more than one concession item. D. children have an elastic demand for game ticket but an inelastic demand for concession items.

A. the seller can prevent children from buying game tickets for adults but cannot prevent children from buying concession items for adults.

The Sunshine Corporation finds that its fixed costs are $40, and that its variable costs are $65 when it produces 3 of units of output. At this output level, what is its average total cost? A.$21.67. B. $35. C. $40. D. $52.50.

B. $35.

A group of firms that colludes by agreeing to restrict output to increase prices and profits is called: A. A duopoly. B. A cartel. C. An oligopoly. D. A conglomerate.

B. A cartel.

Which of the following are characteristics of a perfectly competitive industry? A. Firms are unable to control the prices of the products they sell. B. All of the above. C. Firms are unable to earn an economic profit in the long run. D. Firms sell identical products.

B. All of the above.

Which type of costs are used in determining economic profit? A. Neither of these. B. Both of these. C. Explicit costs. D. Implicit costs.

B. Both of these.

Which of the following is not an assumption of perfectly competitive markets? A. There are many sellers and many buyers, none of which is able to influence the market price of the product. B. Each firm produces a similar but not identical product. C. There are no barriers to new firms entering the market. D. Buyers and sellers have all relevant information with respect to prices, product quality, and sources of supply.

B. Each firm produces a similar but not identical product.

When a firm lowers its price, and the revenue that is gained from selling more is smaller than the revenue that is lost from receiving a lower price, what can you say about marginal revenue? A. You would need to know the firm's costs in order to give a definitive answer. B. It is negative. C. It is positive and increasing. D. It is positive but declining.

B. It is negative.

Which of the following is true at the output level where average total cost is at its minimum? A. Marginal cost equals average variable cost. B. Marginal cost equals average total cost. C. Average variable cost equals fixed cost. D. Average total cost equals average fixed cost.

B. Marginal cost equals average total cost.

Please select the type of market structure for the following good or service: Bread A. Perfect Competition B. Monopolistic Competition C. Oligopoly D. Monopoly

B. Monopolistic Competition

Please select the type of market structure for the following good or service: Kids' Shoes A. Perfect Competition B. Monopolistic Competition C. Oligopoly D. Monopoly

B. Monopolistic Competition

Which of the following are key results of price discrimination? A. Profits decrease and consumer surplus decreases. B. Profits increase and consumer surplus decreases. C. Profits decrease and consumer surplus increases. D. Profits increase and consumer surplus increases.

B. Profits increase and consumer surplus decreases.

Economies of scale occur when A. average costs fall after new firms enter an industry. B. a firm's average cost falls as it expands. C. a firm's average cost rises as it expands. D. productivity increases lower all firms' costs.

B. a firm's average cost falls as it expands.

If a technological advance increases a firm's labor productivity, we would expect its: A. average total cost curve to rise. B. average total cost curve to fall. C. total cost curve to rise. D. average total cost curve to be unaffected

B. average total cost curve to fall.

If a monopolist engages in price discrimination, it will: A. produce less output than if it did not discriminate. B. charge a higher price to groups of customers with a higher willingness to pay for the product. C. realize a smaller profit. D. charge a competitive price to all its customers.

B. charge a higher price to groups of customers with a higher

Over the past twenty years, the number of small family farms has fallen significantly; in their place are large farms that are owned by corporations. Which of the following best explains this trend? A. diminishing marginal product of farm labor B. economies of scale in farming C. declining farm productivity D. diseconomies of scale in farming

B. economies of scale in farming

Suppose that a business incurred implicit costs of $500,000 and explicit costs of $5 million in a specific year. If the firm sold 100,000 units of its output at $50 per unit: A. its accounting losses were $500,000 and its economic losses were zero. B. its accounting profits were zero and its economic losses were $500,000. C. its accounting profits were $100,000 and its economic profits were zero. D. its accounting profits were $500,000 and its economic profits were $1 million.

B. its accounting profits were zero and its economic losses were $500,000.

Table 12-1 shows the demand and cost data facing a monopoly producer of canvas bags. Use the table to answer the following question(s). Quantity Price Total Cost 1 18 14 2 16 20 3 14 26 4 12 32 5 10 38 6 8 44 The profit maximizing price and quantity for the firm are: A. price = $8; quantity = 6 B. price = $12; quantity = 4 C. the firm should not produce anything D. price = $10; quantity = 5

B. price = $12; quantity = 4

Which of the following is an example of an explicit cost of production? A. the cost of forgone labor earnings for an entrepreneur. B. the cost of flour for a baker. C. All of these. D. the lost opportunity to invest in other financial assets when the money is invested in ones business.

B. the cost of flour for a baker.

If a pure monopolist is choosing an output level where marginal revenue is positive but smaller than marginal cost: A. the firm should maintain its output level, but raise the price. B. the firm should produce less output. C. the firm should produce more output. D. it is probably maximizing profits.

B. the firm should produce less output.

Which of the following are implicit costs for a typical firm? A. cost of labor hired by the firm B. the interest that could be earned on money the owner has invested in the firm C. utilities cost D. all of these

B. the interest that could be earned on money the owner has invested in the firm

Which of the following is a requirement for successful price discrimination? A. The firm must be able to divide up, or segment, the market. B. The product must not be easily re-sold. C. All of the above. D. Some customers must have a greater willingness to pay for the product than other consumers.

C. All of the above.

Which type of costs are used in determining accounting profit? A. Implicit costs. B. Both of these. C. Explicit costs. D. Neither of these.

C. Explicit costs.

Which of the following statements is correct? A. In the short run, all costs are adjustable. B. In the short run, all costs are fixed. C. In the long run, all costs are adjustable. D. In the long run, all costs are fixed.

C. In the long run, all costs are adjustable.

When the patent expires on a pharmaceutical drug, what happens to the market? A. It remains a monopoly, but profits are lower. B. It shifts from being perfectly competitive to being a monopoly. C. It shifts from being a monopoly to being perfectly competitive. D. It remains perfectly competitive, but profits are higher.

C. It shifts from being a monopoly to being perfectly competitive.

Please select the type of market structure for the following good or service: Gaming Systems (Playstation, X-Box, etc..) A. Perfect Competition B. Monopolistic Competition C. Oligopoly D. Monopoly

C. Oligopoly

Please select the type of market structure for the following good or service: Private Universities in Houston A. Perfect Competition B. Monopolistic Competition C. Oligopoly D. Monopoly

C. Oligopoly

Please select the type of market structure for the following good or service: Soft Drinks A. Perfect Competition B. Monopolistic Competition C. Oligopoly D. Monopoly

C. Oligopoly

In which type of market can firms sell as much as they want to, without having to lower the price? A. Oligopoly. B. Monopolistic Competition. C. Perfect Competition. D. Monopoly.

C. Perfect Competition.

Which of the following rights is given to the holder of a patent? A. A public franchise. B. The right to produce a product. C. The right to be the only legal provider of a product D. The exclusive right to a creation.

C. The right to be the only legal provider of a product

In the long run there are no barriers to new firms entering a perfectly competitive market. Suppose that firms already in the market are making profits. Which of the following sequence of events best describes the change in market price and output as a result of free entry? A. The market demand curve shifts to the right, causing price to rise and market output to increase B. The market demand curve shifts to the left, causing price to fall and market output to decrease. C. The short-run industry supply curve shifts to the right, causing price to fall and total market output to increase. D. The short-run industry supply curve shifts to the left, causing price to rise; and total market output to decrease.

C. The short-run industry supply curve shifts to the right, causing price to fall and total market output to increase.

Which of the following conditions must exist in order to have a perfectly competitive market? A. The products sold by firms in the market must be different from each other. B. All of the above. C. There must be many buyers and many firms, all of whom are small relative to the market. D. There must be some barriers to entry in order to protect perfect competition.

C. There must be many buyers and many firms, all of whom are small relative to the market.

If the number of people in a publishing company does not go up or down with the quantity of books it publishes, then what categorization should be given to the salaries and benefits for those people? A. They are not considered a cost of production. B. They are a variable cost. C. They are a fixed cost. D. They are an implicit cost.

C. They are a fixed cost.

For most producing firms: A. total costs rise as output is increased to a certain level, and then begin to decline. B. marginal cost rises as output is increased to a certain level, and then begins to decline. C. average total costs decline as output is increased to a certain level, and then begin to rise. D. average total costs rise as output is increased to a certain level, and then begin to decline.

C. average total costs decline as output is increased to a certain level, and then begin to rise.

Answer this question on the basis of the accompanying table that shows average total costs (ATC) for a manufacturing firm whose fixed costs are $10. The profit-maximizing level of output for this firm: Output ATC 1 $40 2 $27 3 $29 4 $31 5 $38 A. is 2. B. is 4. C. cannot be determined from the information given. D. is 3.

C. cannot be determined from the information given.

Elegant Settings manufactures stainless steel cutlery. Table 10-2 shows the company's cost data. Use the Table to answer the following question(s). Quantity Long Run 100 $40 200 $35 300 $30 400 $30 500 $35 Refer to Table 10-2. Elegant Settings experiences A. increasing marginal product beyond an output level of 400. B. economies of scale up to an output level of 400. C. economies of scale at output of 300 or less and diseconomies of scale at an output level above 400. D. diminishing marginal product up to an output level of 400

C. economies of scale at output of 300 or less and diseconomies of scale at an output level above 400.

Monopolistically competitive firms: A. incur losses in both the short run and long run. B. realize economic profits in both the short run and long run. C. may realize either profits or losses in the short run, but realize normal profits (zero economic profits) in the long run. D. realize normal profits (zero economic profits) in the short run but losses in the long run.

C. may realize either profits or losses in the short run, but realize normal profits (zero economic profits) in the long run.

Marginal revenue can become negative for A. perfectly competitive firm but not for a monopoly firm. B. both the monopoly firm and the perfectly competitive firm. C. monopoly firm but not for a perfectly competitive firm. D. neither the monopoly firm nor the perfectly competitive firm.

C. monopoly firm but not for a perfectly competitive firm.

Which of the following is not characteristic of long-run equilibrium under monopolistic competition? A. marginal cost equals marginal revenue B. price exceeds marginal cost C. price equals the minimum of average total cost D. price is equal to average total cost

C. price equals the minimum of average total cost

A pure monopolist is selling 6 units at a price of $12. If the marginal revenue of the seventh unit is $5, then: A. price of the seventh unit is $10. B. price of the seventh unit is greater than $12. C. price of the seventh unit is $11. D. firm's demand curve is perfectly elastic.

C. price of the seventh unit is $11.

Table 12-1 shows the demand and cost data facing a monopoly producer of canvas bags. Use the table to answer the following question(s). Quantity Price Total Cost 1 18 14 2 16 20 3 14 26 4 12 32 5 10 38 6 8 44 At the profit-maximizing output level, A. the firm makes a profit of $4. B. the firm incurs a loss equal to its fixed cost. C. the firm makes a profit of $16. D. the firm makes a profit of $12.

C. the firm makes a profit of $16

Suppose that a pure monopolist can sell 4 units of output at $2 per unit and 5 units at $1.75 per unit. The monopolist will produce and sell the fifth unit if its marginal cost is: A. $1.75 or less. B. $2 or less. C. $1 or less D. $.75 or less.

D. $.75 or less.

Table 10-1 shows the technology of production at the Crunchy Apple Orchard for the month of April 2005. Use this table to answer the following question(s). Number of Workers Apples per day 1 50 2 120 3 180 4 230 5 270 6 300 Diminishing marginal product sets in when the ________ worker is hired. A. 4th B. 5th C. 2nd D. 3rd

D. 3rd

Which of the following are antitrust laws most likely to take exception to? A. Firms choosing to exit a market. B. Price cutting. C. The introduction of a new product into a market. D. A merger between two large firms.

D. A merger between two large firms.

What is the short run? A. A period of time during which a firm can increase or decrease the size of its physical plant. B. A period of time during which a firm can vary all of its inputs. C. A period of time during which a firm can adopt a new technology. D. A period of time during which at least one of the firm's inputs, usually capital, is fixed.

D. A period of time during which at least one of the firm's inputs, usually capital, is fixed.

Which of the following are effects of monopoly? A. Monopoly causes a reduction in consumer surplus. B. Monopoly causes an increase in producer surplus. C. Monopoly causes a reduction in economic efficiency. D. All of the above.

D. All of the above.

Match the following definition with one of the terms below: "When firms agree to charge the same price, or to otherwise not compete." A. Long run equilibrium B. Nash equilibrium C. Dominant strategy D. Collusion

D. Collusion

When a firm's demand curve slopes down and the firm decides to cut price, which of the following happens? A. It sells more units and receives higher revenue per unit B. It sells fewer units and receives lower revenue per unit. C. It sells fewer units but receives higher revenue per unit. D. It sells more units but receives less revenue per unit

D. It sells more units but receives less revenue per unit

Which of the following does not hold true for the perfectly competitive firm in long-run equilibrium? A. Its economic profit will be zero. B. It will be minimizing average total cost. C. It will be charging a price equal to marginal cost. D. Marginal cost is minimized.

D. Marginal cost is minimized.

Please select the type of market structure for the following good or service: A Patented Pharmaceutical Drug A. Perfect Competition B. Monopolistic Competition C. Oligopoly D. Monopoly

D. Monopoly

Please select the type of market structure for the following good or service: Atomic Weapons in the U.S. A. Perfect Competition B. Monopolistic Competition C. Oligopoly D. Monopoly

D. Monopoly

Please select the type of market structure for the following good or service: First Class Mail A. Perfect Competition B. Monopolistic Competition C. Oligopoly D. Monopoly

D. Monopoly

Which of the terms below is defined as follows: "A market structure in which a small number of interdependent firms compete"? A. Barriers to entry. B. Game theory. C. Economies of scale. D. Oligopoly.

D. Oligopoly.

If the concentration ratio in the battery industry is 94%, what does that mean? A. The price is 94% of what the monopoly price would be? B. The market is 94% of the way towards monopoly. C. Only 6% of the market is competitive. D. The largest four firms account for 94% of sales.

D. The largest four firms account for 94% of sales.

Monopolistic competition resembles pure competition because: A. both industries entail the production of differentiated products. B. in both instances firms will operate at the minimum point on their long-run average total cost curves. C. both industries emphasize nonprice competition. D. barriers to entry are either weak or nonexistent.

D. barriers to entry are either weak or nonexistent.

In the short run it is impossible for an expansion of output to increase: A. variable costs. B. marginal cost. C. total costs. D. fixed costs.

D. fixed costs.

Monopolistic competition is characterized by a: A. few dominant firms and substantial entry barriers. B. few dominant firms and low entry barriers. C. large number of firms and low entry barriers. D. large number of firms and substantial entry barriers.

D. large number of firms and substantial entry barriers.

Which of the following is least likely to be a variable cost? A. wages for unskilled labor B. expenditures for raw materials C. shipping charges D. property insurance premiums

D. property insurance premiums

Competition has driven the economic profits in the video rental business to zero. Surya Bacha, who owns a video rental business, would be better off leaving the industry for another alternative. True False

False

At zero units of output a firm's variable costs are zero. True False

True