AG business final quiz 7,8,9
The "average" in average variable cost and average revenue means
Per unit of output
In the widget industry, a high proportion of total costs is fixed costs. In the gadget industry, fixed costs are a small proportion of total costs. Therefore,
a higher degree of price variability is expected in the market for widgets than for gadgets
Profit is maximized when A.marginal cost = average total cost B.marginal revenue = average total cost C.total cost = total revenue D.marginal revenue is maximized E.none of the above
none of the above
The supply curve of a firm is equal to a. the demand curve of the firm b. the average variable cost curve of the firm c. the production function d. average total cost curve of the firm e. none of the above
none of the above
To maximize profits, the firm in monopolistic competition will adjust output to the point at which a. Revenue is maximized b. Variable costs are minimized c. Fixed costs are minimized d. Marginal revenue equals average revenue e. None of the above
none of the above
If the price of the product is less than the minimum average variable cost, then the form produces __________ and earns ___________
nothing; negative profits
The market structure in which the typical firm is reactive is
oligopoly
if fixed cost increase, then for the profit-maximizing firm?
output remains constant
A change in the ____________ would NOT cause a shift in the supply of yellow squash
price of yellow squash
A firm in a monopolistically competitive industry finds that the additional cost of producing one produce moreadditional unit of output is $4 and the additional revenue that could be earned from that additional output is $5. This firm should
produce more
In monopolistic competition, the firm attempts to acquire a quasi-monopoly position by
product differentiation
What drives and distinguishes monopolistic competition is
product differentiation
For a perfectly competitive, profit-maximizing firm, an increase in the fixed costs would cause the
profits of the firm to fall
The typical, perfectly competitive, corn farmer has no control over each of the following in the short run EXCEPT
quantity of fertilizer used
If the marginal revenue is less than the marginal cost, then profit-maximizing firm should
reduce output
In order for a monopoly to continue to be a monopoly
there must be no close substitutes
Fixed costs are exogenous.
true
For monopoly firm, a marginal revenue curve lies always below an average revenue curve
true
If price is below the minimum average variable cost, then it is better to produce nothing.
true
In a perfectly competitive structure, the firm's supply curve is the firm's marginal cost curve.
true
In the real world, both perfect competition and pure monopoly are rare.
true
Profit maximization will always occur in the rational range of production.
true
The firm will stop producing if average revenue is less than minimum average variable cost.
true
A profit-maximizing firm is producing 40 units of stuff using 10 units of labor. The price of stuff is $3/unit and the price of labor is $10. What is the average variable cost?
$2.5
Atotal variable input cost is $20. What is the marginal revenue of the firm? firm produces 20 units of stuff using 5 units of labor. The value of the total product is $60 and the
$3
Which of the following is a constant with respect to output for the perfectly competitive firm? 1.Marginal revenue 2.Total fixed costs 3.Average fixed costs 4.Total revenue 5.Average revenue a. All five b. 1 and 5 only c. 1, 2, and 5 only d. 2, 4, and 5 only e. 1 only
1, 2, and 5 only
In an oligopolistic market, the firms are _________ and pricing tends to be __________
Interdependent; reactive
For a monopoly firm, the profit-maximizing output is at that level where __________ and the price of the product is determined from ___________
MC = MR; AR
In the short-run, the supply curve of the firm is equal to a portion of the firm's
MC curve
To maximize profit, the perfectly competitive firm should adjust output to that point at which
MR = MC
In a perfectly competitive market, if firms are earning economic profits then?
additional firms will enter the industry, driving the price of the product down
The distinguishing difference between a perfectly competitive firm and monopoly firm is
average revenue
An industry that experience wide price swings that are not accompanied by firm entering or leaving the industry is an industry in which the typical firm
has high fixed costs
The defining characteristic of a monopoly is
entry is blocked
A market size saturated by existing firms in the market is one of the necessary conditions for the presence of monopoly.
false
A typical supply curve is discontinuous at the break-even price
false
Average cost can be defined as additional cost associated with producing one additional unit of output.
false
Average variable cost and average fixed cost curves have a U-shape.
false
Firms in low fixed-cost industries are slow to enter or leave the industry.
false
In the short-run, the production function is endogenous.
false
Monopolistic competition is characterized by many firms selling homogeneous products.
false
The entry of other firms is completely blocked in the monopolistic competition structure.
false
The firm supply curve is the marginal cost curve above the break-even price.
false
There are few firms and entry is difficult in a monopolistic competition structure.
false
In a perfectly competitive market, if the price of the product is greater than the break-even price, we would expect to see
firms entering the industry
Higher price variability is expected in those industries with higher
fixed cost
Those firms with relatively high __________ have relatively high _______________
fixed costs; price variability
The monopolistic competition market structure differs from the perfectly competitive market structure most strongly with regards to which assumption?
homogeneous product
Oligopolistic firms are characterized by
interdependence
The marginal revenue curve for the perfectly competitive firm
is a straight, horizontal line
In a perfectly competitive, long-run equilibrium, the price of the product is equal to the
minimum average total cost
The rational range of production begins at the
shut-down point
At the break-even point
the economic profits of the firm are zero
Which of the following is NOT a supply shifter for tomatoes grown in south Florida?
the price of tomatoes