ECO 232 Exam 3
Which of the following is a short-run adjustment?
A local bakery hires two additional bakers
A purely competitive seller is:
a "price taker"
Which of the following industries most likely approximates pure competition?
agriculture
In the long run:
all costs are variable costs
Fixed cost is:
any cost which does not change when the firm changes its output
The short run is characterized by:
at least one fixed resource
If you operated a small bakery, which of the following would be a variable cost in the short run?
baking supplies (flour, salt, etc.)
Under pure competition in the long run:
both allocative efficiency and productive efficiency are achieved
A perfectly elastic demand curve implies that the firm:
can sell as much output as it chooses at the existing price
Marginal cost is the:
change in total cost that results from producing one more unit of output
Average fixed cost:
declines continually as output increases
Which of the following constitutes an implicit cost to the Johnston Manufacturing Company?
depreciation charges on company-owned equipment
Economic profits are calculated by subtracting:
explicit and implicit costs from total revenue.
Which of the following is most likely to be a variable cost?
fuel and power payments
To economists the main difference between the short run and the long run is that:
in the long run all resources are variable, while in the short run at least one resource is fixed
Marginal revenue for a purely competitive firm:
is equal to price
In the short run a purely competitive seller will shut down if product price:
is less than AVC
If a purely competitive firm shuts down in the short run:
it will realize a loss equal to its total fixed costs
If a firm decides to produce no output in the short run, its cost will be:
its fixed costs
A purely competitive firm;s short-run supply curve is:
its marginal cost curve above average variable cost
Implicit costs are:
nonexpenditure costs
The demand schedule or curve confronted by the individual purely competitive firm is:
perfectly elastic
Diseconomies of scale:
pertain to the long run
Which of the following is most likely to be a fixed cost?
property insurance premiums
A constant-cost industry is one in which:
resource prices remain unchanged as output in increased
The long run is characterized by:
the ability of the firm to change its plant size
The basic characteristic of the short run is that:
the firm does not have sufficient time to change the size of its plant.
Implicit and explicit costs are different in that:
the former refer to nonexpenditure costs and the latter to out-of-pocket costs.
If a variable input is added to some fixed input, beyond some point the resulting extra output will decline. This statement describes:
the law of diminishing returns
Fixed costs are associated with:
the short run only
Economists use the term imperfect competition to describe:
those markets which are not purely competitive
Total cost minus total variable cost equals:
total fixed costs
Firms seek to maximize:
total profit