ECON compilation of all tests- FINAL

A monopolist maximizes profit by an output where MC = P

False

If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.

False

Marginal costs are costs that do not vary with the quantity of output produced

False

When an individual firm in a competitive market decreases its production, it is likely that the market price will rise.

False

For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?

The cost of the steel that is used in producing automobiles

When new firms enter a perfectly competitive market,

the short run market supply curve shifts right

Which of the following can be added to profit to obtain total revenue?

total cost

Economies of scale occur when a firm's

long-run average total costs are decreasing as output increases.

The minimum points of the ATC and AVC occurs where the

marginal cost curve intersects those curves

The efficient scale of the firm is the quantity of output that

minimizes ATC

Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%.

$1,000

Katherine gives piano lessons for $15 per hour. She also grows flowers, which she arranges and sells at the local farmer's market. One day she spends 5 hours planting $50 worth of seeds in her garden. Once the seeds have grown into flowers, she can sell them for $150 at the farmer's market. Katherine's accounting profits are

$100, and her economic profits are $25

Assume a certain firm is producing 1,000 units of output. At q =1,000, the firm's marginal cost equals $20 and its ATC = $25. The firm sells its output for $ 30 per unit At Q = 999, the firm's total costs equal

$24,980

An airline knows that there are two types of travelers: business travelers and vacationers. For a particular flight, there are 100 business travelers who will pay $600 for a ticket while there are 50 vacationers who will pay $300 for a ticket. There are 150 seats available on the plane. Suppose the cost to the airline of providing the flight is $20,000, which includes the cost of the pilots, flight attendants, fuel, etc.

$55,000

When a certain competitive firm produces and sells 100 units of output, marginal revenue is $80. When the same firm produces and sells 200 units of output, what is average revenue?

$80

Comparing marginal revenue to marginal cost (i) reveals the contribution of the last unit of production to total profit. (ii) is helpful in making profit-maximizing production decisions. (iii) tells a firm whether its fixed costs are too high.

(i) and (ii)

Which of the following are necessary characteristics of a monopoly? (i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes. (iii) The firm generates a large economic profit. (iv) The firm is located in a small geographic market.

(i) and (ii)

Suppose a monopolist has a demand curve that can be expressed as P=90-Q. The monopolist's marginal revenue curve can be expressed as MR=90-2Q. The monopolist has constant marginal costs and average total costs of $10. The profit-maximizing monopolist will produce an output level of

40 units

For a particular competitive firm, the min. value of the AVC is $12 and is reached when 200 units are produced. For the same firm, the min value of ATC is $15 and is reached at 230 units output. Which of the following is correct?

In the long run, the firm will shut down if the price is $11

Consider a competitive market with a large number of identical firms. The firms in this market do not use any resources that are available only in limited quantities. In this market, an increase in demand will

Increase price in the short run but not in the long run

If the government regulates the price a natural monopolist can charge to be equal to the firm's marginal cost, the government will likely need to subsidize the firm.

True

In a monopoly market, the socially efficient quantity of output is typically higher than the profit-maximizing quantity for the monopolist

True

When an industry is a natural monopoly

a larger number of firms will lead to a higher average cost

Go to google drive

aight

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue, then

decreasing output would increase the firm's profit.