Econ 102 Final

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The short run supply curve for the perfectly competitive firm is the portion of its

MC curve above the AVC curve

Another term for the total quantity of the output is

total product

if marginal product is negative then

total product is falling

For a hotdog vendor, the hotdog buns represents his

variable input

In a perfectly competitive firm at its long run competitive equilibrium point

P=AR=MR=LATC=SATC=MC

In the short run, the perfectly competitive firm will always earn an economic profit when

P>ATC

In economics, how long is the long run?

Whatever time it takes a firm to vary all inputs

Explicit cost

actual expenditures that a firm must make

Economic rent serves

an allocation function by guiding available supplies to the most efficient use

Managers in oligopoly firms must

anticipate the reaction of rival firms

The perfectly competitive firm's profit-maximizing rate of production occurs

at the point at which marginal revenue is equal to marginal cost

In a perfectly competitive market, positive economic profits act to

attract new entrants into industry

if the price of labor is constant and a firm experiences diminishing marginal product then its,

average variable cost increases

When total product is rising, a. fixed cost must be rising b. marginal product must be positive c. variable cost must be declining d. marginal product is negative

b

Which of the following is a characteristic of a monopoly market? a. many firms b. one firm c. easy entry d. firm is a price take

b

Which of the following would be a fixed input to an automobile firm? a. Steel b. A factory c. Car batteries d. Engineers

b

which of following is a characteristic of oligopoly a. easy entry and exist b. strategic dependence c. many firms d. none of the above

b

which of the following is always true of a perfectly competitive market a. MC=MR=AVC b. p=d=MR c.AVC=ATC=p d.p=d=AVC

b

which of the following is closest to a perfectly competitive market a. automobiles b.corn c.pizza d.breakfast cereal

b

which one of the following could be classified as an oligopoly a. retailing b. tobacco production c. farming d. fast food restaurants

b

For a perfect competitor, price equals

both average revenue and marginal revenue

All of the following are true regarding perfectly competitive price determination expect a. the market price is determined by the interactions among all buyers and firms b. the individual firm takes the market price as given c. the individual firm is known as a market price maker d. the individual firm's marginal revenue curve is horizontal at the market price

c

The firm's short run costs contain a. only variable costs b. only fixed costs c. both variable and fixed d. none of the above

c

Which of the following is correct? a. TC = TFC-TVC b. TC = TFC/TVC c. TC = TFC + TVC d. TC = TFC * TVC

c

Which of the following is not a characteristic of a perfectly competitive market? a. The products sold by the firms in the market are homogeneous b. There are many buyers and sellers in the market c. It is difficult for a firm to enter or leave the market d. Each firm is a price taker

c

which of the following is not a necessary condition of oligopoly a. strategic dependence b.barriers to entry c. differentiated products d. a small number of firms

c

which of the following is true a. monopoly results in a higher quantity of output being sod compared with perfect competition b. price discrimination occurs when there are differences in prices that reflect differences in marginal cost c.charging all customers the same price when costs vary can actually be a case of price discrimination d. price discrimination guarantees that the monopolists will make profit

c

Marginal cost equals

change in total cost/ change in output

the measurement of industry concentration which calculates the percentage of all sales contributed by a specific number of leading firms is called the

concentration ratio

In perfectly competitive market structure both buyers and sellers have equal access to information. This implies

consumers are able to find out about lower prices charged by other firms

Due to extremely large fixed costs, an electricity generating plant probably experiences which of the following returns to size? a. diseconomies of scale b. diminishing marginal product c. constant returns to scale d. economies of scale

d

Which of the following is always true at a firm's profit maximizing rate of product a.TR=TC b.MR>MC c.the total revenue curve lie below the total cost curve d. MR=MC

d

Which of the following would be a fixed input for amusement park? a.Ticket Takers b. Unpopped popcorn c. Concession workers d. roller coasters

d

Which of the following would not be considered a fixed cost of production? a. Insurance payments on plant and equipment b. the opportunity cost of capital c. Interest payments on a loan d. wages paid to labor

d

which of the following is not a feature of a monopolitically competitive market a. numerous buyers and sellers b. differentiated products c. freedom of entry and exist d. a homogeneous product

d

Suppose a perfectly competitive firm face the following short run cost and revenue conditions: ATC=$12, AVC=$10, MC=$15, MR=$13. The firm should

decrease output

the product sold by monopolitisically competitive firms are

differentiated

If a firm gets so large that management of employees and other resources becomes a costly problem, it will be experiencing

diseconomies of scale

Suppose a firm doubles its output in the long run. At the same time the unit cost of production remains unchanged. We can conclude that the firm is

facing constant returns to scale

Production function indicate the relationship between

factor inputs and the quantity of output

In the long run when a perfectly competitive firm experiences negative economic profit,

firm exist the industry, the market supply curve shifts leftward, and the market price rises

A basic distinction between the long run and the short run is that

in the short run, complete adjustment of all inputs is impossible, while in the long run all inputs can be adjusted

Suppose a perfectly competitive firm face the following short run cost and revenue conditions: ATC=$25.50, AVC=$20.50, MC=$25.50, MR=$28.50. The firm should

increase output

Clothing retailers have faced greater competition in recent years as more firms have entered the clothing market. Some of the competition has come from foreign competitors, but much of it is domestic competition. As a result there is much competition in markets for many types of clothing and

individual buyers and sellers cannot affect the market price because it is determined by the market forces of demand and supply

The difference between explicit costs and implicit costs

is that explicit costs involve resources that are purchased and implicit costs involve resources the firm already own

When a firm earns zero economic profits,

it has a positive accounting profit

The use of a tariff provides monopoly protection since

it reduces competition from imports by raising the import prices

There are 30 firms in an industry. what happens to that industry's four firm concentration ration when the third and fourth largest firms merge

it will increase

Suppose a family owned yogurt shop has $80,000 in total revenues, $36,000 in rent, and $20,000 in additional operating costs. The husband and wife work in the shop and pay no wages to themselves or others. The economic profits from the shop are

less than $24,000

Under perfectly competition, if a firm that sets its price slightly above the market price would

lose all its customers

In a monopolistically competitive market there are

many firms producing similar but not identical products

An oligopolistic market, each firm

must consider the reaction of rival firms when making a pricing and output decision

If in the short run total product is decreasing as more workers are hired, then the marginal product is

negative

Monopoly producers face

no competitive producers of the same product.

the concept of the production function implies that a firm using resources inefficiently will

obtain less output than the theoretical production function shows

strategic behavior and game theory are features of which market scheme

oligopoly

The demand curve for the product of a perfectly competitive firm is

perfectly elastic

In a monopolistically competitive market, the consumer receives the benefit of

product diversity

If a monopolist raises its price,

quantity demanded decreases

if a monopolist lowers its price

quantity demanded increases

An individual would willingly give a concert for $2000. IF she is paid $5000 for the concert, she is

receiving $3000 economic rent

For a perfectly competitive firm, any price below its minimum AVC is a

shutdown price

The less sensitive quantity demanded is to a change in price, the

smaller the absolute price elasticity of demand.

The law of diminishing marginal product states that

successive equal-sized increase in labor, when added to fixed factors of production, will result in smaller increases of output

Changes in production functions are associated with changes in

technology

Economists generally define the short run as being

that period of time in which at least one of the firm's inputs, usually plant size, is fixed.

If an industry's long run per unit cost decrease as its output increases then

the firm is most likely a decreasing cost industry

the typical shape of the long-run average cost curve is more like

the letter U

In economies, the planning horizon is defined as

the long run, during which all inputs are variable

the minimum possible short-run average costs are equal to long run average costs when

the long-run curve is at it's minimum point

Implicit costs are

the opportunity cost of using factors that a producer does not buy or hire but already owns

an oligopoly is a market situation in which

there are very few sellers and they recognize their strategic dependence on one another

Suppose that a firm is currently producing 1,000 units of output. At this level of output, AVC is $1 per unit, and TFC is $500. What is the firm's TC?

$1,500

Suppose that Justin Timberlake sells 10,000 tickets to a concert at $480 each. If the equilibrium price is $600 per ticket for a fixed supply of 10,000 tickets, what is the value of the additional economic rent that Timberlake could earn if he charged the market price?

$1.2 Million

When super stuff corporation produces 5,000 units, total costs equal $150,000 and total variable costs equal $75,000. At this level of output, what is super stuff average fixed cost?

$15

if the explicit cost to a firm to produce a unit of output are $6 and the firm sells 20,000 units f output for $9 per unit, the accounting profit received by the producer is

$600,000

Suppose that a firm is currently producing 500 units of output. At this level output, TVC = $1,000 and TFC= $2,500. What is the firms ATC?

$7

Jaycee Jeans sold 40 pairs of jeans at a price of $40. When it lowered its price to $20, the quantity sold increased to 60 pairs. Calculate the absolute value of the price elasticity of demand. Use the midpoint formula.

.6

Owners of a coffee shop finds that they can sell 150 donuts a day when the price of a donut is $1.20. When they price donuts at $1, they sell 170 donuts. The absolute value of the price elasticity of demand for donuts is

.69

At a price of $100, Beachside Canoe Rentals rented 11 canoes. When it increased its rental price to $125, 9 canoes were rented. Calculate the absolute value of the price elasticity of demand for canoe rentals using the midpoint formula.

.9

suppose that industry X has two firms with equal market shares, and industry Y has three firms with 65%, 30%, and 5% market share. The HHI of X is

150 lower than the HHI of Y

Suppose that one worker can produce 15 cookies, two workers can produce 35 cookies together, and three workers can produce 65 cookies together. What is the marginal product of the 2nd worker?

20 cookies

suppose there are four firms in an industry. the market shares of the four firms are 5%, 20%, 35%, and 40%. the HHI for that industry is

3250

Suppose an industry has total sales of 25 million per year, the two largest firms have sales of 6 million each, the third largest firm has sales of 2 million each, and the fourth largest has sales of 1 million. the four firm concentration ratio of industry is

60%

Suppose an industry has total sales of 35 million per year, the largest firms have sales of 10 million each, the third largest firm has sales of 4 million each, and the fourth largest has sales of 2 million. the four firm concentration ratio of industry is

65.7%

Suppose an industry has total sales of 35 million per year, the largest firms have sales of 10 million each, the third largest firm has sales of 4 million each, and the fourth largest has sales of 2 million. The second largest firm has sales of

7 million

Suppose that an industry consists of 100 firms, the top 4 firms have annual sales of 1, 1.5, 2, 2.5 million. If the industry has annual sales of 8.5 million, the four firm concentration ratio is

82%

Suppose a perfectly competitive firm face the following short run cost and revenue conditions: ATC=$6.00, AVC=$4.00, MC=$3.50, MR=$3.50. The firm should

Shut down

Average total cost equals

TC/Q

Average Variable cost equals

TVC/Q

Mr. James' company producers candy bars. Which is not a variable input for this firm? a. Sugar b. Assembly line workers c. The machine d. Packing material

The machine

Which of the following is not a characteristic of a perfectly competitive industry a. economic profits must be positive in the short run b.the industry demand curve is downward sloping c. there is free entry and exist in the long run d. each firm produces the same homogeneous product

a

Which of the following is not one of the reasons a firm might be expected to experience economies of scale? a. depreciation b. specialization c. improved productive equipment d. the dimensional factor

a

which of the following is a short run decision for a firm? a. Firing workers b. downsizing the firm's manufacturing plant c. investing the new addition to the firms manufacturing plant d. expanding the firms distributing network of long haul trucks and smaller delivery trucks

a

which of the following is most likely to be sold in an oligopoly market a. cell phone service b. pizza c. electricity d. computer software

a

which of the following is not a characteristic of oligopoly firms a. perfect elastic demand curve b. few firms c. strategic dependence d. product differentiation

a

which of the following is true for the perfectly competitive firm a. Price and MR are always equal b. MR is less than price c. MR is more than price d. Price elasticity of demand is equal to 1

a

Being a price taker essentially means

a firm cannot influence the market price

When a firm uses technological improvements to increase output from the same amount of inputs the result is

a new production function

In oligopoly, any action by one firm to change price, output, or quality causes

a reaction by other firms


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