Chapter 8 SmartBook

The determinants of a firm's supply do not include A.) Demand B.) Taxes and subsidies C.) Technology D.) Tastes and preferences E.) Expectations F.) The price of factor inputs

A.) Demand D.) Tastes and preferences

Which of the following best explains why a firm would not stop producing if the loss is less than its fixed costs? A.) Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover AVC and some FC B.) Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover ATC and some FC. C.) Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover ATC and some MC D.) Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover AVC and some MC

A.) Fixed costs are paid regardless of whether something or nothing is produced, and the firm receives enough revenue per-unit to cover AVC and some FC

The profit-maximizing rule of MR = MC states that: A.) in the short-run, the firm will maximize profit or minimize loss by producing the output at which marginal revenue equals marginal cost B.) in the short-run, the firm will maximize profit or minimize loss by producing the output at which total revenue equals total cost C.) in the short-run, the firm will maximize profit or minimize loss by producing the output at which marginal revenue exceeds marginal cost D.) in the long-run, the firm will maximize profit or minimize loss by producing the output at which marginal revenue equals marginal cost.

A.) in the short-run, the firm will maximize profit or minimize loss by producing the output at which marginal revenue equals marginal cost.

In the short-run, a perfectly competitive firm will maximize profit by producing up to the point where marginal revenue is equal to marginal cost it.... A.) market price exceeds average variable cost B.) market price is less than average variable cost

A.) market price exceeds average variable cost

A firm should produce if... A.) price is equal to or greater than minimum average variable cost, meaning that the firm is profitable or that losses are less than fixed costs. B.) price is equal to or less than minimum average fixed costs, meaning that the firm is profitable or that losses are less than variable costs. C.) price equals to or greater than minimum average total costs, meaning that the firm is profitable or that losses are less than fixed costs. D.) price is equal to or less than minimum average variable costs, meaning that the firm is profitable or that losses are less than fixed costs.

A.) price is equal to or greater than minimum average variable cost, meaning that the firm is profitable or that losses are less than fixed costs. C.) price is equal to or greater than minimum average total cost, meaning that the firm is profitable or losses are less than fixed costs.

In perfect competition, a firm's economic profit is equal to: A.) price minus average total cost multiplied by quantity. B.) price minus average total cost plus quantity C.) total revenue minus average total cost multiplied by the marginal product of labor D.) price minus average variable cost multiplied by quantity E.) marginal revenue minus average total cost multiplied by quantity.

A.) price minus average total cost multiplied by quantity E.) marginal revenue minus average total cost multiplied by quantity.

The marginal cost curve is the firm's short-run _________________ curve A.) supply B.) cost C.) demand

A.) supply

If payroll taxes decreases, then... A.) the optimal rate of output increases B.) the optimal rate of output decreases C.) Fixed costs decreases D.) marginal costs decrease E.) average total costs decrease

A.) the optimal rate of output increases D.) marginal costs decrease E.) average total costs decrease

Recall that ______________ increase with _________ A.) total cost; output B.) marginal cost; price C.) average fixed cost; output D.) fixed cost; output

A.) total cost; output

Which of the following best explains why the firm should produce any unit of output whose price exceeds its marginal cost? A.) Because the firm would gain more in costs from selling that unit than it would add to its revenues by producing it B.) Because the firm would gain more in revenue from selling that unit than it would add to its cost by producing it C.) Because the firm would gain less in revenue from selling that unit than it would add to its costs by producing it D.) Because the firm would gain more in revenue from selling that unit than it would add to its revenues by producing it.

B.) Because the firm would gain more in revenue from selling that unit than it would add to its cost by producing it.

A wage increase would increase marginal costs and shift the supply curve A.) downward B.) upward C.) to the right D.) to the left

B.) upward D.) to the right

What is the difference between accounting profit and economic profit? A.) Accounting profit equals total revenue less economic costs. Economic profit equals total revenue less explicit costs B.) Accounting profit equals less implicit costs. Economic profits equal total revenue less explicit costs C.) Accounting profit equals less explicit costs. Economic profits equal total revenue less economic cost (explicit and implicit) D.) Accounting profit equals total revenue less fixed costs Economic profit equals total revenue less implicit costs.

C.) Accounting profit equals less explicit costs. Economic profits equal total revenue less economic cost (explicit and implicit)

The demand curve for a perfectly competitive firm is perfectly horizontal because.... A.) it cannot obtain a lower price by restricting its output, nor does it need to lower its price to increase its sales volume. B.) it cannot obtain a higher price by restricting its output nor does it need to raise its price to increase its sales volume C.) it cannot obtain a higher price by restricting its output, nor does it need to lower its price to increase its sales volume. D.) it cannot obtain a higher price by increasing its output nor does it need to lower its price to increase its sales volume.

C.) It cannot obtain a higher price by restricting its output nor does it need to lower its price to increase its sales volume

The portion of the firm's _____________ cost curve lying ______________ its average _________________ cost curve is its short-run supply curve. A.) marginal; below; total B.) total; above; marginal C.) marginal; above; variable

C.) marginal; above; variable

___________ profit is the total revenue minus explicit and implicit costs. A.) Natural B.) Mixed C.) Accounting D.) Economic

D.) Economic

If a firm's price exceeds the firm's minimum average total cost (ATC), then: A.) it will incur a loss, but continue to operate B.) it will break even C.) it will incur an economic loss D.) it will incur an economic profit E.) it will incur a normal profit

D.) it will incur an economic profit

In a perfectly competitive market, the _____________ revenue curve concides with the demand curve because the product price and hence marginal revenue, is _______________ A.) total; constant B.) marginal; rising C.) marginal; falling D.) total; falling E.) total; rising F.) marginal; constant

F.) marginal; constant

A perfectly competitive firm in the short-run will maximize profit by producing up to the point where marginal revenue is equal to marginal cost if their market price is less than minimum average variable cost.

False