Microeconomics - Test Chp. 8-9

Accounting costs and economic costs differ because:

Economic costs include the opportunity costs of all resources used, while accounting costs include actual dollar outlays.

In long-run perfectly competitive equilibrium, marginal cost:

Equals the minimum of the ATC.

The $600 paid in property taxes counts as:

Explicit Cost

In defining economic cost, economists emphasize:

Explicit and Implicit cost while accountants only explicit costs.

In which of the following cases would a firm exit from a market?

P < Long-run ATC

In which of the following cases would a firm enter a market?

P > long-run ATC.

A change in which of the following will change the optimal rate of output?

Payroll taxes

To maximize profits, a competitive firm will seek to expand output until:

Price equals marginal cost.

The total fixed costs for this firm are approximately:

$50

The profit-maximizing output for this firm is:

200 units

Assuming the entrepreneur does not pay herself, the $1,000 she could earn as a employee elsewhere is considered:

An implicit cost

Which of the following does not affect marginal cost?

An increase in property taxes.

For the perfectly competitive firm, the marginal revenue is always:

Constant

A firm that makes zero economic profits:

Covers all its costs, including a provision for normal profit.

Which of the following is not a characteristic of a perfectly competitive market?

High barriers

The price of this good:

Is $1 per unit

Which of the following is true about a competitive market supply curve:

It is the sum of the marginal cost curves of all firms.

In order to sell additional units of their products, competitive firms must:

Lower their price.

In a perfectly competitive market, when price is equal to the:

Minimum average total cost, economic profit is zero

Economists assume the principal motivation of producers is:

Profit

If a firm finds that its marginal cost is greater than its price, it:

Should reduce production.

A perfectly competitive firm is a price taker because:

The price of the product is determined by many buyers and sellers.