FBM study set

At 200 units of output, total cost is $36,000 and total variable cost is $20,000. What does total fixed cost equal at 200 units?

$16,000

A monopolist can sell 15,000 units at a price of $100 per unit. Lowering price by $1 raises the quantity demanded by 500 units. What is the change in total revenue resulting from this price change?

$34,000

A farmer has 1,000 acres on which he has previously grown corn. His yield per acre is 100 bushels of corn. If the corn payment rate is $0.43 a bushel, his production contract payment equals ___.

$36,550

Price rises from $10 to $15, and the quantity demanded falls from 100 units to 90 units. What is the coefficient of the price of elasticity of demand between these two prices?

0.26

If quantity demanded rises by 90 percent as price falls by 40 percent, the coefficient of price elasticity of demand equals ___.

2.25

What will not shift a supply curve?

A change in the good's own price

A normal good is ___.

A good for which the demand rises as income rises

A "quota" is ___.

A legal limit on the amount of a good that can be imported

If an increase in income results in an increase in the demand for chicken, then chicken is ___.

A normal good

At a price above equilibrium price, there is ___.

A surplus

Pete's Burgers has fixed costs of $200. When Pete's Burgers makes 500 hamburgers, their variables costs are $150. When Pete's makes 600 hamburgers their variables costs are $250. The average total cost when they are making 600 hamburgers is ___, and the marginal cost for the range between 500 and 600 hamburgers is ___.

ATC= $0.75: MC= $1.00

Utility means satisfaction; products have what type of utility?

All of the above -form -place -time

Why do you want to know markets cycle?

All of the above -what season you should sell -what day of the week to sell your product -whether the market is going up or down

Some years ago, chemists at 3m corporation were trying to create a super strong glue. Somehow they got their molecules twisted and came up with one of the weakest glues ever made. Rather than pouring it down the drain, they tried coating some paper with it. Voila! The "post-it note" was born. In this case, 3m was acting as ___.

An entrepreneur

If Cassandra bought 16 cotton blouses last year when her income was $40,000 and she buys 24 cotton blouses this year when her income is $35,000, then blouses are ___.

An inferior good

If Max's demand for hot dogs falls as his income rises, then for Max hot dogs are ___.

An inferior good

Suppose that you are evaluating the market for baseball bats. Louisville Slugger produces the Barry Bonds bat. Since his record breaking 73 home runs more kids prefer his bat to any other. What will happen in the market for the Bonds'' bat?

Both the price and quantity will increase

In the theory of perfect competition, ___.

Buyers and sellers of the product know everything that there is to know about the product

A fixed input is an input whose quantity ___.

Cannot be changed as output changes in the short run

Economics is a social science that involves the study of how individuals ___.

Choose among alternatives

When economists speak of scarcity, they are referring to the ___.

Condition in which people's wants outstrip the limited resources available to satisfy those wants

The ___ is King in the market place.

Consumer

If the industry level supply curve shifts right, what result is most likely?

Decrease in price

Suppose that one fixed and one variable input are used to produce good X. As the marginal physical product of the variable input increases, then marginal cost ___.

Decreases

Any time a consumer will take more only at lower prices is ___.

Demand

Price movements over time occur because of ___.

Demand and supply shifts

The law of supply states that the price and quantity supplied are ___.

Directly related, ceteris paribus

The dynamic process of searching for the equilibrium or market-clearing price is ___.

Discovery

Concentration ratios are NOT perfect guides to industry concentration, because they ___.

Do not take into account foreign competition from substitute goods

A "price-taker" is a firm that ___.

Does NOT have the ability to control the price of the product it sells

Average fixed cost ___.

Does not change as output changes and exists only in the short run

In a monopolistically competitive industry, ___.

Each firm in the industry produces a slightly diffrentiated product

___ is not an assumption of the theory of perfect competition.

Each firm produces and sells a differentiated product

A natural monopoly exists when ___.

Economies of scale are so large that only one firm can survive and achieve low unit costs

Markets that quickly and accurately assimilate all available information into market prices are referred to as ___ markets.

Efficient

___ is the best real-world example of monopolistic competition

Electricity generation

If a firm earns a normal profit, then it has generated revenues ___.

Equal to the sum of implicit and explicit costs

If the price of good X falls and the demand for good X is unit elastic, then the percentage rise in quantity demanded is ___ the percentage fall in price, and total revenue___.

Equal to; remains constant

A cost that is incurred when an actual monetary payment is a(n) ___ cost.

Explicit

Is the following true or false?: In the short run, all inputs are fixed inputs

False

Costs that do not change with output are called ___ costs.

Fixed

Which of the following is NOT one of the categories of resources?

Government

The primary purpose of the production Function is to determine___.

How much to produce

What can an agriculture producer determine from the production function?

How much to produce

What does the production function indicate for an agricultural producer?

How output responds to inputs

The cost of resources used in production for which no actual monetary payment is made is a(n) ___ cost.

Implicit

A tariff tax is on ___.

Imports

If the percentage change in quantity demanded of a good is less than the percentage change in income, then the good is said to be ___.

Income inelastic

If the percentage in quantity demanded of a good is equal to the percentage change in income, then the good is said to be ___.

Income unit elastic

The law of demand states that price and quantity demanded are ___.

Inversely related, ceteris paribus

The marginal cost of making the 100th unit is $50 and the average total cost of the 100th unit is $100. What do we know about the average total cost curve at a quantity of 100?

It is falling (decreasing)

If a monopolistically competitive firm raises its price, then ___.

It should expect to lose some, but not all, of its consumers

The operator knows that the value of the dollar on the world market can have an impact on grain markets. If the dollar increases in value related to other currencies, it will impact U.S. corn and wheat prices in what way?

Make corn and wheat prices higher on world market

The middlemen in the marketing system operate on ___.

Margin

The rule of profit maximization says that firms should produce at the point where ___.

Marginal revenue equals marginal cost

Comparing the retail price to the farm price for an agricultural commodity allows you to determine the portion of each dollar spent at the retail level that farmers receive for their commodities. The difference between retail value and farm value is ___.

Marketing margin

At a price of $15, Marta buys 3 CD's per month. When the price increases to $20, Marta buys 2 CD's per month. Luz says that Marta's demand for CD's has decreased. Is Luz correct?

No, Luz is incorrect. Marta's quantity demanded has decreased, but her demand has stayed the same

A monopoly may exist because ___.

One firm has the exclusive ownership of a secure resource.

An agriculture producer learns what from the production function?

Output responses to an input

One major reason for the law of demand is that ___.

People substitute relatively lower-priced goods for relatively higher-priced goods

A concentration ration indicates the ___.

Percentage of total sales accounted for by the (for example) four larger firms

If quantity demanded is completely unresponsive to changes in price, demand is ___.

Perfectly inelastic

Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in ___.

Price

Suppose that the supply curve shifts right. What is the most likely effect on price and quantity?

Price will decrease and quantity will increase

The point on a production function graph where marginal cost equals marginal revenue is where ___.

Profits will be the greatest

A farmer who is willing to pay a set dollar amount to establish floor or base price is to be received would do what?

Purchase a put option

On a chart, a line that connects all the high points as the market moves higher forms a trend line. When projected out, it forms points of ___.

Resistance

An increase in the number of buyers in an area will result in a ___.

Rightward shift in the demandcurve

Real-world markets that approximate the four assumptions of the theory of perfect competition include ___.

Some agricultural markets and the stock market

The two most important driving factors that influence the market price are ___.

Supply and demand

It is impossible to be competitive in the complex commodity market place without___.

The ability to collect accurate data

What does stage two in production function graph determine?

The amount of variable input to use

What does marginal cost measure?

The change in cost by adding another unit of input

What is stage 2 of the production function?

The decision making stage

Derived Demand

The demand for product at the farm level

What is the law of supply?

The higher the price the, the higher the quantity supplied will be

The fewer substitutes for a good, ___.

The lower its price elasticity of demand

Equilibrium

The price where demand and supply intersect

Demand

The relationship between quantity purchased and price

Supply Curve

The relationship between quantity supplied and price

In the theory of perfect competition, ___.

The single firm's demand curve is horizontal

Economic profit is the difference between total revenue and ___.

The sum of explicit and implicit costs

"Entrepreneurship" is ___.

The talent of organizing the use of land, labor, and capital, among other things

Tobacco production is one of the more heavily subsidizes industries in the United States. Suppose that as a result of intense lobbying from health-related concerns, Congress repeals the tobacco farms' subsidies. What scenario would most likely occur?

The tobacco farms' supply curve would shift leftward, since it would now cost more to produce each level of output

The N.M Corporation has exactly the same amount of production as last year except for fixed costs, which are $50,000 this year compared to $30,000 last year. ___ is False.

The total cost curve will be the same this year as last year

If the wage rate increases, ___ will not happen.

The total fixed cost curve shifting up

___ are correct assumptions of oligopoly

There are barriers to entry and firms produce and sell either homogeneous or differentiated products

Which of the following is true about the relationship between price and quantity supplied?

There is usually a direct relationship

If the percentage change in quantity demanded is equal to the percentage change in price, demand is ___.

Unit elastic

When a market has huge swings on a daily basis, it is described as ___.

Volatile

On a supply-and-demand diagram, equilibrium is found___.

Where the demand and supply curves intersect

Five months ago Wilson opened up a health club. Which of the following is an implicit cost related to the health club?

Wilson previously worked as an accountant, earning $3,000 a month

Is the following true?: Accounting profit is the difference between total revenue and explicit costs

Yes

When an increase in the level of production of one enterprise causes a reduction in the level of production in another enterprise, these two enterprises are said to be ___.

competitive

Which of the following terms describes this situation: Quantity taken will increase only if the price comes down?

demand

Is the following true?: Money must change hands before a cost can be incurred.

no

Direct Marketing

selling through a farmers' market

An unrecoverable cost that should be disregarded in any way current or future decision is also called a(n) ___ cost.

sunk

The point where marginal costs = marginal revenue is ___.

where profits are at a maximum

Is the following true?: In the short run, changes in output can only be brought about by a change in the quantity of variable inputs

yes