online mcc microecon test 3

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To draw a​ firm's short-run supply​ curve, you need its ________ curve and it's ___________ price

marginal cost, shut down

The monopolist can use the marginal principle to decide the​ profit-maximizing quantity by determining where

marginal rev equals marginal cost

A key feature of a monopoly is that

marginal revenue is less than price.

To maximize​ profit, a monopolist picks the quantity at which ___________ equals ______________.

marginal revenue, marginal cost

For a​ monopolist, the​ firm-specific demand curve is the same as the _________ demand curve

market

Assume that the firms in a perfectly competitive market are earning normal profits and the demand for the product increases. In the short​ run, the

market price will​ rise, and economic profits will be earned.

Assume that the firms in a perfectly competitive market are earning normal profits and the demand for the product increases. In the long​ run, the

market price will​ rise, economic profits will be​ earned, and new firms will enter.

A marginal cost curve intersects the average cost curve at the _________ point of the average cost curve.

minimum

The market price for wheat is ​$7. If a​ farmer's marginal cost is ​$5​, the farmer should produce _________ output

more

A possible reason for lower average​ long-run costs in a larger operation is that labor will be ________ specialized in the large operation which will __________ labor​ productivity, leading to ________ average cost.

more, increase, lower

The presence of indivisible inputs explains the _______ portion of a​ long-run average-cost​ curve, and the notion of replication explains the __________ portion of a​ long-run average-cost curve.

negatively sloped, horizontal

The​ long-run average-cost curve is ________ sloped for small quantities of output because there are economies of scale resulting from indivisible inputs and labor specialization. Over the horizontal portion of the cost​ curve, increases in inputs lead to ____________ increases in​ output, so the average cost​ doesn't change.

negatively, proportionate

A monopoly that cuts its price gains revenue from its __________ customers but loses revenue from its _____________ customers

new, previous

Airline Pricing. Consider an airline that initially has a single price of ​$200 for all consumers. At this​ price, it has 120 business travelers and 60 tourists. The​ airline's marginal cost is ​$50. The slope of the business demand curve is −​$4 per​ traveler, and the slope of the tourist demand curve is minus−​$2 per traveler. Does the​ single-price policy maximize the​ airline's profit? The airline should _____________ the price it charges business travelers and it should ___________ the price it charges tourists.

no, increase, decrease

The​ long-run supply curve shows the relationship between ___________ on the horizontal axis and __________ on the vertical axis

quantity supplied, price

The negatively sloped portion of the​ short-run marginal-cost curve is explained by __________ and the positively sloped portion of the​ short-run marginal-cost curve is explained by __________

INCREASING MARGINAL PRODUCTIVITY, DIMINISHING MARGINAL RETURNS

The​ short-run marginal-cost curve is shaped like the letter ______ and the​ short-run average-cost curve is shaped like the letter ______

J, U

The marginal cost of an additional baseball fan is​ zero, so the​ profit-maximizing condition simplifies to

MR=0

You want to determine the​ profit-maximizing quantity for a monopolist. You can ask the​ firm's accountant to draw the​ firm's revenue and costs​ curves, but each curve will cost you​ $1,000. From the following​ list, indicate which curves you will​ request: average total​ cost, average fixed​ cost, average variable​ cost, marginal​ cost, demand, marginal revenue.

Marginal revenue and marginal cost.

Which of the following is not true when the firm experiences diminishing marginal​ product?

The total product is decreasing.

If the world price is 13 cents per​ pound, what areas of the world supply sugar to the world market and the United​ States? Suppose the United States bans sugar imports. You predict that the new price of sugar in the U.S. will be at least ​

The​ Caribbean, Latin​ America, Australia, and South Africa. .24

The​ short-run market supply curve is

a curve showing the relationship between the market price and the quantity supplied in the short run.

To show the deadweight loss from​ monopoly, we compare the monopoly outcome to what would happen under

a perfectly competitive market

An example of a market which has perfect... oligopoly competition

air travel t-shirts

At the​ break-even price,

all of the above

Payoff for Casino Approval. In​ 1993, seven Native American Tribes in Michigan cut a deal with the state. In exchange for being granted a monopoly in​ Vegas-style casino​ gambling, the tribes agreed to pay the state and local governments a share of its profits. By​ 1998, the profit sharing totaled more than​ $183 million. Why did the tribes propose this​ deal?

all of the above

To prolong their monopoly​ power, the producers of branded drugs pay millions of dollars to

all of the above

Suppose a firm in a perfectly competitive market is earning normal profits and there is an increase in demand. In the short​ run, the firm earns

an economic profit as prices rise. In the long​ run, new firms will enter and prices will fall.

If the monopoly profits are large enough to offset the substantial research and development costs of a new​ product, a firm will develop the product and become a monopolist.

true

The​ short-run average cost of production could be the same for two different quantities.

true

To maximize​ profit, the firm chooses the quantity of output that generates the largest

vertical difference between the total revenue curve and the total cost curve.

To maximize​ profit, the firm chooses the quantity of output

where the​ marginal-revenue curve equals the​ marginal-cost curve.

There are scale economies in the production of electricity from _________ because electricity can be generated from turbines of different sizes.

wind

Operate or Shut​ Down? Referring to the figure at​ right, suppose the market price of shirts drops to ​$3.25. At this​ price, the marginal principle will be satisfied _________ on the​ marginal-cost curve. The price of ​$3.25 is __________ than​ AVC, so the firm will be better off _____________.

at point c, greater than, operating at a loss.

In an​ increasing-cost industry, the

average cost increases because firms in a larger industry pay higher input prices and use less productive inputs.

For the​ break-even price ___________ equals the price so the firm earns ___________ economic profit.

average total cost, 0

A firm that is losing money should continue to operate in the short run if the market price exceeds

average variable cost

As the total output of a​ constant-cost industry​ increases, the _________ cost doesn't change, so the​ long-run supply curve is _________

average, horizontal

The​ short-run marginal cost​ (MC) is

change in total cost/ change in output

In​ Pakistan, the market for phone service is perfectly _______ because a person can enter the market with a relatively small initial investment —only ​$310.

competitive

At the current level of​ output, the marginal cost of MP3 players is less than the average cost. If you increase​ output, the average cost will

decrease

A decrease in price _________ a perfectly competitive​ firm's marginal​ revenue, so it ____________ the quantity supplied. This is the law of ___________ in action.

decrease, decrease, supply

At the current output​ level, a​ farmer's marginal cost of producing sugar is ​$0.26. If the price of sugar is ​$0.21 per​ pound, the farmer should ________ production. If the price of sugar is ​$0.30 per​ pound, the farmer should _______

decrease, increase

Changes in the​ Break-Even Price. Consider a switchgrass farmer whose initial​ break-even price is​ $76 =​ $36 explicit cost​ + $40 opportunity cost for land. For each of the following​ changes, explain the effects on the​ farmer's production cost and​ break-even price. If the cost of fertilizer decreases​, the​ break-even price will ____________. If the market price of alfalfa increasesincreases​, the​ break-even price will ___________

decrease, increase

The​ break-even price for switchgrass varies with __________ and on average is ______ per ton.

fertility of the land, 76

Equilibrium and​ Break-Even Price. The equilibrium price in a perfectly competitive industry is sometimes below the​ break-even price, sometimes above​ it, and sometimes equal to it because the

firm is a price taker and the equilibrium price is determined in the competitive market.

Average ________ cost is fixed cost divided by the quantity produced. Average ____________ cost is variable cost divided by the quantity produced.​ Short-run average total cost is equal to ___________.

fixed, variable, AFC+AVC

________ cost is cost that does not vary with the quantity produced. _________ cost is cost that varies with the quantity produced.​ Short-run total cost is the total cost of production when __________ fixed.

fixed, variable, at least one input is

An increase in demand causes a large initial upward __________ in price, followed by a downward __________ to the new​ long-run equilibrium price.

jump, slide

An information good has a ________ first-copy cost, and a _________ marginal cost

large, small

For a​ monopolist, marginal revenue is ______ than price

less

The price of the hardback edition of a​ best-selling book is typically three times the price of the paperback edition because the eager consumers who buy hardbacks have __________ elastic demand for the book

less

The aspirin sold in airports is more expensive than aspirin sold in grocery stores because the demand for aspirin in airports is relatively ________

less elastic

When a firm is perfectly flexible in its choice of all​ inputs, the firm is operating in the _______ run

long

A firm's _________ -run total cost is the total cost of production when the firm is perfectly flexible in choosing its​ inputs, including its production facility. When a firm has ______ returns to​ scale, as a firm scales up its​ operation, costs increase proportionately with​ output, so​ long-run average cost is ___________.

long, constant, constant

If a restaurant has two groups of​ customers, seniors and​ nonseniors, the seniors will be offered a

lower price because they have a more elastic demand.

At a price of ​$21 per​ CD, the marginal revenue of a CD seller is ​$15. If the marginal cost of CDs is ​$11​, the firm should ___________ its price to ______________ the quantity sold

lower, increase

A firm will shut down an unprofitable business if ___________ is less than __________.

total revenue, variable cost

A Bluffing​ Farmer:Is the farmer​ bluffing, or will the farm workers lose their jobs if they reject the proposed pay​ cut?

He's bluffing

Tickets and Merchandise. Consider a baseball team that has a ticket price of ​$35 and sells 25,000 tickets at this price. The slope of the demand curve is −​$0.002. The typical fan purchases ​$25 worth of merchandise that costs the owner ​$6 to provide. The marginal revenue from ticket sales is ​__________. Including both ticket sales and​ merchandise, the marginal fan contributes an additional ___________ to the team's total rev.

-15, 4

If a monopolist wants to increase the quantity sold from 6 units to 7 ​units, it cuts the price from $15 to $13. The marginal revenue​ = ​

1

Consumer Compensation. Consider the chapter opener about campus beverage monopolies. Your job is to fully compensate each student for the cost associated with a​ soft-drink monopoly. Suppose​ Coca-Cola increased the price of soft drinks by ​$0.10 per can and each student consumed 1010 soft drinks before the monopoly was granted. a. Kate continues to buy 10 soft drinks at the higher price. What is the appropriate​ compensation?______ Elise buys only 4 soft drinks at the higher price. Her demand curve is linear. What is the appropriate​ compensation?_______

1.00, .70

Refer to the figure on the right. Suppose the output of a large aluminum firm drops from 2 million pounds to 0.5 million pounds per year. The​ long-run average cost of producing aluminum will go from

1.6 to 2.8

Patent for NoSmak. A potential new​ drug, NoSmak, cures​ lip-smacking with one​ dose, but research and development would cost ​$90 million. The monopoly profit​ (earned while a single firm produces the​ product) will be ​$5 million per year. After a patent​ expires, the original developer of the drug will have sufficient brand loyalty to earn ​$1 million per year for another 10 years. a. What is the shortest patent length required to induce a firm to develop the​ drug? _______ years. What is the shortest patent length required to induce a firm to develop the drug if we ignore the profit earned after the patent​ expires _____________ years

16, 18

Compute the Cost. Edward the entrepreneur takes 2 hours to cut a lawn and he cuts 500 lawns per year. He uses​ solar-powered equipment​ (truck and​ mower) that will last forever—and could be sold at any time for​ $20,000. Edward could earn ​$8 per hour as a pedicurist. The interest rate is 10 percent. a. Given his current output​ level, his marginal cost is ______ and his average cost is _______. Suppose he decides to reduce the number of lawns cut by​ half, to 250 per year. His new marginal cost is _______ and his new average cost is ________.

16, 20, 16, 24

Copper Price Elasticity of Supply. Suppose the price of copper increases from ​$2,000 to ​$2,400 per ton and the quantity supplied increases from 8 million tons to 12 million tons. Use the midpoint formula to compute the price elasticity of supply for copper

2.2

The average cost for providing​ off-street parking is ​$30 per space per​ day, and as a monopolist you could charge ​$40 per space per day for 200 spaces. The maximum amount that you are willing to pay for a monopoly is

2000

Suppose the following changes occur. a. Your opportunity cost for work time triples​ (you are the first worker​ hired), from​ $50 to​ $150. ​ However, the cost per worker continues to be​ $50 per day. b. The interest rate on your​ $365,000 investment for your workshop falls from 10 to 5 percent. c. Labor productivity—the quantity produced by each workforce—doubles. The​ short-run average cost for 10 paddles is _______

25

A firm produces 20 units of output at a market price of ​$4​, a marginal cost of ​$4​, and an average cost of ​$2. The​ firm's economic profit is ______, and the firm ______ maximizing it's profit.

40, is

Compute the Costs. Consider a firm that has a fixed cost of​ $60. Complete the fixed cost​ (FC) column. Complete the total cost​ (TC) column. Complete the marginal cost​ (MC) column Complete the average fixed cost​ (AFC) column. Complete the average variable cost​ (AVC) column. Complete the average total cost (ATC) column.

60 for all of them, (just add them together),8 12 15 20, 60 30 20 15 12, 10 9 10 11.25 13, ( add avc and afc together to get atc)

Suppose a person quits a job earning ​$60,000 per year and starts a business with ​$120,000 withdrawn from a​ money-market account earning 15 percent per year. The implicit cost of the business is ________ for the entrepreneur's time plus __________ for the​ entrepreneur's funds

60,000, 18,000

A perfectly competitive industry has 75 identical firms. At a price of ​$6​, the typical firm supplies 10 units of​ output, so the market quantity supplied is ________ units of output

750

Suppose a new​ super-sized wind turbine is developed. Fill in the blanks in the following table.

875,000 & .0219

Consider the arthritis drug example in your text. If the research and development costs are ​$18 ​million, Flexjoint will develop the drug if it gets a patent that lasts at least _______ years

9

At a price of ​$20 per​ CD, a firm sells 50 CDs. If the slope of the demand curve is −​$0.20​, marginal revenue for the 51st CD is ​$_______. The firm should cut the price to sell one more CD if the marginal cost is less than _________

9.80, 9.80

Paying to Keep a Generic Out. Suppose your firm produces a branded drug at an average cost of ​$5 per dose and a price of ​$8 per dose. You sell 1,100 doses per day. If a generic version of the drug were​ introduced, your daily sales would decrease to 800 doses. How much are you willing to pay each day to prevent the entry of the generic​ version?

900

Maximizing the Profit​ Margin? According to the marginal​ principle, the firm should choose the quantity of output at which price equals marginal cost. A tempting alternative is to maximize the​ firm's profit​ margin, defined as the difference between price and​ short-run average total cost. Using this​ approach, which of the following would best describe the​ firm's short-run supply​ curve? Assume the firm will shut down rather than operate at a loss.

A vertical line at the quantity that minimizes average cost for prices above minimum average cost.

__________ input is an input that cannot be scaled down to produce a smaller quantity of output.

An indivisible

Margarine Prices. Several years​ ago, people became concerned about the undesirable health effects of eating margarine. The demand for margarine​ dropped, decreasing its price. Some time​ later, the price of margarine started rising​ steadily, although demand​ hadn't been changing. After several months of price​ hikes, the price of margarine reached the price observed before demand decreased. According to a consumer watchdog​ organization, the rising price of margarine was evidence of a conspiracy on the part of margarine producers. Which of the following provides an alternative explanation for the rising price of margarine and its eventual return to the original​ price?

As firms exited a​ constant-cost industry, the equilibrium price increased.

Assume bagged ice is a​ constant-cost industry in​ long-run equilibrium. If a natural disaster occurs that knocks power out for several​ weeks, what​ happens?

Demand increases which increases price in the short run. New supply is shipped in from out of state which then lowers prices.

Which of the following statements regarding diseconomies of scale and diminishing returns is​ true?

Diseconomies of scale is caused by coordination problems and higher input costs.

Deregulation and the Cost of Trucking. Suppose the government initially limits the number of trucking firms that can haul freight. The market for truck freight is initially served by a single firm that produces 5 million ton miles of service per​ year, where 1 ton mile is the hauling of 1 ton of freight 1 mile. The newly elected governor has proposed that other firms be allowed to enter the market. At a public hearing on the issue of eliminating the entry​ restrictions, the manager of the existing firm issued a grim​ warning: ​ "If you allow entry into the​ market, 4 or 5 firms will​ enter, and the unit cost of truck freight will at least triple. There are big economies of scale in​ trucking, so a single large firm is more​ cost-efficient than several small firms would​ be." What's your reaction to this​ statement?

Economies of scale are slight. Unit cost will​ rise, but not by much.

Soybeans versus Processor Chips. Why is the market for soybeans perfectly​ competitive, with thousands of soybean​ farmers, while the market for computer processor chips is dominated by a few large​ firms?

Entry into the chip industry requires a relatively large investment.

The National Park Service Monopoly. The National Park service grants a single firm the right to sell food and other goods in Yosemite National Park. a. What are the​ trade-offs associated with this​ policy? Who gains and who​ loses? Does your answer to part​ (a) depend on whether the monopoly is granted as a political favor or auctioned to the highest​ bidder?

Fewer goods will be sold at higher prices. The firm will​ gain, consumers will​ lose, and there will be a deadweight loss. Yes. With an​ auction, monopoly profits will go to the government.

Ending a Casino Monopoly. Consider a state that initially has a single casino for gambling. Suppose the state allows a second casino to enter the market. How would you expect the entry of the second casino to affect​ (a) the variety of games offered in the casinos and​ (b) the payout​ (winnings) per dollar​ spent?

Greater variety of​ games; increased payout per dollar spent.

As the total output of a decreasing​-cost industry​ increases, the average cost of production __________ so the supply curve is _________.

decreases, negatively sloped

The deadweight loss from monopoly is shown graphically by the area between the

demand and supply curves from the equilibrium quantity to the quantity supplied.

The​ short-run supply curve is steeper than the​ long-run supply curve because of the principle of

diminishing marginal returns

The typical​ short-run ​average-cost curve is shaped like the letter​ U, while the typical​ long-run ​average-cost curve is shaped like the letter L because

diminishing marginal returns, long run

Over the positively sloped portion of the​ short-run average-cost​ curve, the effect of​ _______ dominates the effect of __________.

diminishing marginal​ returns; falling average fixed cost

Tax Cuts for​ Discounters? Consider the following statement from a member of a city​ council: ​"Several of the merchants in our city offer discounts to our senior citizens. These discounts obviously decrease the​ merchants' profits, so we should decrease the​ merchants' taxes to offset their losses on​ senior-citizen discounts." Do you agree or​ disagree?

disagree

A situation in which the​ long-run average cost of production increases as output increases is called ________ of scale.

diseconomies

In the long​ run, for some firms the​ long-run average-cost curve will be positively sloped for high output levels because of

diseconomies of scale

Economic Detective and the Case of Margarine Prices: In a​ constant-cost industry, when demand decreases the​ long-run equilibrium price

does not change

When marginal cost is less than average​ cost, an increase in output ________ average cost. When marginal cost exceeds average​ cost, an increase in output __________ average cost

down, up

Because _________ cost typically exceeds ________ cost, ______ profit typically exceeds ______ profit.

economic, accounting, accounting, economic

An increase in the price of coffee increased the quantity supplied as land was converted from growing _________ to growing coffee

tea

A​ firm's objective is to maximize its __________ profit, which equals its total revenue minus its _________ cost. A firm's cost is always lower than its ________ cost, so its ___________ profit is always higher than its _________ profit.

economic, economic, accounting, economic, accounting, economic

A situation in which the​ long-run average cost of production decreases as output increases is called ______ of scale. The output at which scale economies are exhausted is the __________ scale.

economies, minimum efficient

An increase in the price of shirts will cause firms to _________ the industry. Entry will continue until ________ equals ___________

enter, avg cost, price

The monopolist decision process involves a​ three-step process: 1. Finding the quantity at which marginal revenue __________ marginal cost. Using the curve to find the price associated with the​ monopolist's chosen quantity. Computing the ________ sold as the _________ and the ____ as the ________ times the number of units sold.

equals, demand, profit per unit, price minus avg total cost, total profit, profit per unit

A firm will operate so long as the price

exceeds average variable cost

A firm will operate so long as revenue

exceeds variable cost

A firm making zero economic profit stays in the market because total revenue is high enough to cover all the​ firm's costs, including the opportunity costs of the​ entrepreneur's

explicit and implicit costs.

economic cost equals ______ cost plus ________ cost

explicit, implicit

A monopoly is inefficient solely because the monopolist gets a profit at the expense of consumers.

false

The government only grants a patent for a product that would otherwise not be developed.

false

Economic profit equals __________ minus _________

total rev, econ cost

Same Average Cost with Different​ Quantities? Suppose there are two pencil producers with identical production facilitieslong dash—identical factories and equipment. The firms pay the same wages and pay the same prices for materials. Sam has a small workforce and produces 500 pencils per​ minute; Marian has a​ medium-size workforce and produces 1,000 pencils per minute. The two firms have the same average total cost of 15 cents per pencil. Suppose you build a production facility identical to the ones used by the other firms and hire enough workers and buy enough materials to produce 1,500 pencils per minute. You expect your average cost to be __________ 15 cents per pencil

greater than

A Better Whale​ Mold The cost of the first whale produced with the new mold is __________ the cost with the original mold At what quantity of whales will production with the new mold be less costly than production with the original​ mold?

greater than, 3

For information goods such as a music video distributed​ online, the cost of producing the first copy is very _________, but the marginal cost of reproduction is ___________

high, very low

If a restaurant has two groups of​ customers, seniors and​ nonseniors, the nonseniors will be offered a

higher price because they have a less elastic demand and the​ firm's profits will increase from sales to this group.

In a​ constant-cost industry, the​ long-run supply curve is

horizontal

For a perfectly competitive​ firm, the​ firm-specific demand curve is __________ and for a​ monopolist, the​ firm-specific demand curve is ________

horizontal, negatively sloped

A switch from perfect competition to monopoly __________ the price and ___________ the quantity sold. Consumer surplus __________ ​, while profit ________ . The net loss to society is the _________ loss from monopoly.

increase, decrease, decrease, increase, deadweight

As the total output of an​ increasing-cost industry​ increases, the average cost of production _____________ because input prices ___________ and the productivity of inputs used by firms __________

increase, increase, decrease

Consider a delivery firm that delivers packages by​ bicycle, charging ​$14 per package and paying each of its workers ​$13 per hour. One​ day, one of the workers was three hours late to​ work, and the number of packages delivered that day decreased by two packages. The tardiness of the worker _______________ Based on the new information provided by the tardy​ worker, the firm should produce fewer deliveries by reducing its workforce because the marginal cost is __________ the price

increased, greater than

As the quantity produced by a monopolist​ increases, the gap between the marginal revenue curve and demand curve

increases

The average cost of electricity __________ as the size of the wind turbine decreases.

increases

As the price of shipping services​ increases, the quantity supplied

increases as firms deploy less efficient ships and as each ship travels faster.

According to the principle of diminishing​ returns, as one input increases while the other inputs are held​ fixed, output

increases at a decreasing rate which causes the marginal product to fall as output increases.

Suppose the demand for shirts increases. In the short​ run, the price __________ by a relatively large amount. As firms enter the​ market, the price __________. In the new​ long-run equilibrium, there is a net __________ in price relative to the old equilibrium.

increases, decreases, increase

A patent increases the incentive to develop new products because it ___________ the price of the product and thus generates profit to cover a​ firm's costs of ______________.

increases, development

The cost of producing the first fake killer whale is about three times the cost of producing the second because the firm uses _______ inputs

indivisible

Your firm has a price of ​$3​, an average total cost of ​$5​, and an average variable cost of ​$2. In the short​ run, you should _________ because ___________ exceeds ______________. In the long​ run, you should __________ the market because ________ exceeds _____________.

operate, price, average variable cost, exit, average total cost, price

Your firm has a total revenue of ​$300​, a total cost of ​$700​, and a variable cost of ​$200. You should __________ because _________ exceeds ____________.

operate, total rev, variable cost

The computation of economic cost is based on the principle of

opportunity cost

A​ firm's implicit cost is defined as the _________ cost of nonpurchased​ inputs, such as the​ entrepreneur's ___________ and ___________

opportunity, time, personal funds

Negative Marginal Revenue. The manager of your firm is puzzled because the larger the quantity of output​ sold, the lower its total revenue. The manager gets weekly data in a table with two columns of​ numbers: Quantity Sold and Total Revenue. After you do some computations and add a third and a fourth column of​ numbers, the manager looks at the new table and​ says, "Aha, now I see why selling more decreases total​ revenue." The third column of numbers has data on ___________ and the fourth column has data on _____________ How do the additional columns of numbers explain the negative relationship between quantity sold and total​ revenue? _______

percentage change in quantity, percentage change in price, If the percentage decrease in price is greater than the percentage increase in​ quantity, total revenue will fall.

A reliable predictor of a​ consumer's willingness to pay for a movie is the consumption of

popcorn

The​ marginal-cost curve for producing crude oil is _______ sloped, reflecting variation in the cost of extracting oil from different sources.

positively

In an​ increasing-cost industry, the​ long-run supply curve is

positively sloped because the greater demand for inputs and labor increases the average cost of producing the product.

For a perfectly competitive​ firm, marginal revenue equals _____________ and to maximize​ profit, the firm produces the quantity of output at which ______ = _________

price, marginal cost, price

The​ firm-specific demand curve shows the relationship between the ________ charged by the firm and the __________ by the firm

price, quantity sold

Expand If Profit Margin Is​ Positive? Consider a firm that uses the following rule to decide how much output to​ produce: If the profit margin​ (price minus​ short-run average total​ cost) is​ positive, the firm will produce more output. Compared to a​ profit-maximizing firm, the firm will

produce more output and earn lower economic profit.

In some​ cases, a patent is socially beneficial because it

provides a valuable product that would not otherwise be developedprovides a valuable product that would not otherwise be developed.

A​ firm's short-run supply curve shows the relationship between _________________ on the horizontal axis and the ___________ on the vertical axis

quantity supplied, price

Suppose a firm starts with a single price and then switches to a​ price-discrimination scheme. The firm will ____________ he price for the group of consumers with the lessless elastic demand and ____________ the price for the group with the more elastic demand.

raise, lower

Whenever the marginal value is equal to the average​ value, the average value will

remain the same

Which of the following is not a policy the government uses to intervene in markets dominated by a single​ firm?

rent prohibition

The process of using public policy to gain economic profit is

rent seeking

The​ profit-sharing agreement between Michigan and the Native American tribes for casinos is an example of

rent seeking

Senior citizens pay less than everyone else for admission to a​ movie, but pay the same as everyone else for popcorn because popcorn is _________, but admission is not

resalable

Economic profit equals _________ minus __________

revenue, economic cost

Opportunity Cost and Entrepreneurship : The opportunity cost of driving for Uber or Lyft includes the

salary and fringe benefits from a regular job.

The _________ run is defined as a period over which a firm cannot change its production facility.

short

When the price of zinc dropped below​ $1,900, the price dropped below​ Alcoa's ______ price, so the company _________

shut down, closed mines

A​ constant-cost industry consumes a relatively _________ amount of inputs such as labor and​ materials, so as industry output increases the prices of these inputs ____________

small, do not change

Recent innovations in photovoltaic technology have reduced the unit cost of __________ power

solar

Land-use zoning that limits the amount of land for apartments generates a relatively __________ long-run supply curve for​ housing, so an increase in the demand for apartments leads to a relatively __________ increase in price

steep, large

Examples of​ increasing-cost industries​ include:

sugar and apartments.

A cost that a firm has already paid or committed to​ pay, so it cannot be​ recovered, is a _________ cost

sunk

A perfectly competitive firm is a price ________ while a monopolist is a price __________

taker, maker

Publishers charge more for hardback books because

the more casual readers are willing to wait for the​ lower-priced paperback.

Equilibrium in a market is where

the quantity of the product supplied equals the quantity demanded and the typical firm in the market maximizes its profit.

One can tell that the figure to the right shows short run costs because... (two squiggly lines going up from left to right)

total costs are positive when output is zero implying fixed costs.

Rules of Monopoly. In the board game​ Monopoly, when a player gets the third deed for a group of properties​ (for example, the third orange​ property), the player doubles the rent charged on each property in the group.​ Similarly, a player who has a single railroad charges a rent of​ $25, while a player who has all four railroads charges a rent of​ $200 for each railroad. a. Are these pricing rules consistent with the analysis of monopoly in this​ chapter? In the​ game, is there a deadweight loss from​ monopoly?

yes, no

The​ firm's short-run supply curve is the​ firm's

​marginal-cost curve, above the minimum of the average variable cost.

A hurricane increases the demand for​ ice, shifting the demand curve to the right. In the short​ run, the supply curve is relatively

​steep; in the long​ run, the supply curve is horizontal.


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