AG business final quiz 7,8,9

The "average" in average variable cost and average revenue means

Per unit of output

In the widget industry, a high proportion of total costs is fixed costs. In the gadget industry, fixed costs are a small proportion of total costs. Therefore,

a higher degree of price variability is expected in the market for widgets than for gadgets

Profit is maximized when A.marginal cost = average total cost B.marginal revenue = average total cost C.total cost = total revenue D.marginal revenue is maximized E.none of the above

none of the above

The supply curve of a firm is equal to a. the demand curve of the firm b. the average variable cost curve of the firm c. the production function d. average total cost curve of the firm e. none of the above

none of the above

To maximize profits, the firm in monopolistic competition will adjust output to the point at which a. Revenue is maximized b. Variable costs are minimized c. Fixed costs are minimized d. Marginal revenue equals average revenue e. None of the above

none of the above

If the price of the product is less than the minimum average variable cost, then the form produces __________ and earns ___________

nothing; negative profits

The market structure in which the typical firm is reactive is

oligopoly

if fixed cost increase, then for the profit-maximizing firm?

output remains constant

A change in the ____________ would NOT cause a shift in the supply of yellow squash

price of yellow squash

A firm in a monopolistically competitive industry finds that the additional cost of producing one produce moreadditional unit of output is $4 and the additional revenue that could be earned from that additional output is $5. This firm should

produce more

In monopolistic competition, the firm attempts to acquire a quasi-monopoly position by

product differentiation

What drives and distinguishes monopolistic competition is

product differentiation

For a perfectly competitive, profit-maximizing firm, an increase in the fixed costs would cause the

profits of the firm to fall

The typical, perfectly competitive, corn farmer has no control over each of the following in the short run EXCEPT

quantity of fertilizer used

If the marginal revenue is less than the marginal cost, then profit-maximizing firm should

reduce output

In order for a monopoly to continue to be a monopoly

there must be no close substitutes

Fixed costs are exogenous.

true

For monopoly firm, a marginal revenue curve lies always below an average revenue curve

true

If price is below the minimum average variable cost, then it is better to produce nothing.

true

In a perfectly competitive structure, the firm's supply curve is the firm's marginal cost curve.

true

In the real world, both perfect competition and pure monopoly are rare.

true

Profit maximization will always occur in the rational range of production.

true

The firm will stop producing if average revenue is less than minimum average variable cost.

true

A profit-maximizing firm is producing 40 units of stuff using 10 units of labor. The price of stuff is $3/unit and the price of labor is $10. What is the average variable cost?

$2.5

Atotal variable input cost is $20. What is the marginal revenue of the firm? firm produces 20 units of stuff using 5 units of labor. The value of the total product is $60 and the

$3

Which of the following is a constant with respect to output for the perfectly competitive firm? 1.Marginal revenue 2.Total fixed costs 3.Average fixed costs 4.Total revenue 5.Average revenue a. All five b. 1 and 5 only c. 1, 2, and 5 only d. 2, 4, and 5 only e. 1 only

1, 2, and 5 only

In an oligopolistic market, the firms are _________ and pricing tends to be __________

Interdependent; reactive

For a monopoly firm, the profit-maximizing output is at that level where __________ and the price of the product is determined from ___________

MC = MR; AR

In the short-run, the supply curve of the firm is equal to a portion of the firm's

MC curve

To maximize profit, the perfectly competitive firm should adjust output to that point at which

MR = MC

In a perfectly competitive market, if firms are earning economic profits then?

additional firms will enter the industry, driving the price of the product down

The distinguishing difference between a perfectly competitive firm and monopoly firm is

average revenue

An industry that experience wide price swings that are not accompanied by firm entering or leaving the industry is an industry in which the typical firm

has high fixed costs

The defining characteristic of a monopoly is

entry is blocked

A market size saturated by existing firms in the market is one of the necessary conditions for the presence of monopoly.

false

A typical supply curve is discontinuous at the break-even price

false

Average cost can be defined as additional cost associated with producing one additional unit of output.

false

Average variable cost and average fixed cost curves have a U-shape.

false

Firms in low fixed-cost industries are slow to enter or leave the industry.

false

In the short-run, the production function is endogenous.

false

Monopolistic competition is characterized by many firms selling homogeneous products.

false

The entry of other firms is completely blocked in the monopolistic competition structure.

false

The firm supply curve is the marginal cost curve above the break-even price.

false

There are few firms and entry is difficult in a monopolistic competition structure.

false

In a perfectly competitive market, if the price of the product is greater than the break-even price, we would expect to see

firms entering the industry

Higher price variability is expected in those industries with higher

fixed cost

Those firms with relatively high __________ have relatively high _______________

fixed costs; price variability

The monopolistic competition market structure differs from the perfectly competitive market structure most strongly with regards to which assumption?

homogeneous product

Oligopolistic firms are characterized by

interdependence

The marginal revenue curve for the perfectly competitive firm

is a straight, horizontal line

In a perfectly competitive, long-run equilibrium, the price of the product is equal to the

minimum average total cost

The rational range of production begins at the

shut-down point

At the break-even point

the economic profits of the firm are zero

Which of the following is NOT a supply shifter for tomatoes grown in south Florida?

the price of tomatoes