Eco Final

Refer to the figure above. The socially efficient price and output combination is:

$5 and 7 units of output.

Refer to the figure above. If the firm chooses to operate, to profit maximize, the firm will choose to produce __________ units and charge a price of __________.

3.5; $22.50

Refer to the figure above. When the demand is P2 = $15, what is the profit maximizing output? (pic)

60

Refer to the figure above. When the demand is P2 = $15, this producer will earn a _____ of _______. (pic)

Loss, $60

Suppose you quit your job to start a business. In the first month, your total revenue was $6,000. You paid: $1,000 in monthly rent for office space. $200 in monthly rent for equipment. $3,000 to your workers in wages for the month. $1,000 for the supplies you used that month. You determine that your profit that month was negative $200. Why?

You accounted for lost salary of $1,000.

If a firm collects $80 in revenues when it sells 4 units, $100 in revenues when it sells 5 units, and $120 when it sells 6 units, one can infer the firm is more likely to be:

a perfect competitor

Pure monopoly exists when:

a single firm produces a good with no close substitutes.

A perfectly competitive firm's output price is $8 and the firm is producing 77 units with a marginal cost of $11. The firm should:

decrease production

When the market price of mushrooms is $40 per bushel, if Moe chooses the profit maximizing quantity he will This graph shows the cost functions of Moe's mushroom gathering business, which is perfectly competitive. (pic)

earn positive profits

Generally, ______ motivate firms to enter an industry while ______ motivate firms to exit an industry.

economic profits; economic losses

Economic profits are

equal to total revenue minus both explicit and implicit costs.

For perfectly competitive firms price _____ marginal revenue; for monopolists price ____ marginal revenue.

equals; is greater than

An increase in the price the firm receives for its output will cause the firm to:

expand output and earn greater profits or smaller losses.

If a perfectly competitive firm produces an output level where price is greater than marginal costs, then the firm should: vv

expand output to earn greater profits or smaller losses. expand output to earn greater profits or smaller losses.

A perfectly competitive firm's output price is $5 and the firm is producing 37 units with a marginal cost of $3. The firm should:

increase production.

In order to sell another unit, an imperfectly competitive firm must:

lower its price.

For all firms, the additional revenue collected from the sale of one additional unit of output is:

marginal revenue.

Patents and copyrights, which confer market power, exist to:

protect research, development and creative expression. protect research, development and creative expression.

Suppose all firms in a perfectly competitive industry are experiencing economic profits. One would expect that, over time, the number of firms will _______ and the market price will _____.

rise; fall

Suppose a firm is collecting $1,700 in total revenues and the total costs of its variable factors of production are $1,900 at its current level of output. One can predict that the firm will

shut down.

Accounting profits are

the difference between total revenues and explicit costs.

If all firms in a perfectly competitive industry earn a normal profit, then:

the number of firms in the industry is stable.

If you were to start your own business, your implicit costs would include:

the opportunity cost of your time

In the short run, if a firm chooses to operate and produce output, it must be the case that:

total revenues are greater than or equal to the cost of variable factors of production.

When mushrooms sell for $10 per bushel, if Moe chooses the profit maximizing quantity Moe will gather This graph shows the cost functions of Moe's mushroom gathering business, which is perfectly competitive (pic)

zero bushels