Econ 6

__________________refers to the additional revenue gained from selling one more unit

Marginal Revenue

Freedom of entry into a market tends to preserve

competition

Fill in the blank: Firms in a so-called perfectly competitive market would face a(n) ________ demand curve for their product.

horizontal

Who is likely to complain to state regulatory authorities about unlicensed movers defrauding customers?

licensed movers

Under perfect competition, any profit-maximizing producer faces a market price equal to its

marginal costs

In economic terms, a practical approach to maximizing profits requires an examination of how changes in production affect ________________ and ________________ .

marginal revenue; marginal cost

Idaho farmers can sell as large a quantity of their potato crop as they wish,

provided each is willing to accept the prevailing market price.

Fill in the blank. A(n) ________ market requires perfect and complete information among all participants.

perfectly competitive

If a perfectly competitive firm is a price taker, then

pressure from competing firms will force acceptance of the prevailing market price.

I'maGoldMiner has benefited from a record rise in gold prices in the global commodities market. While the price of its output is highly influenced by market speculation, if it wants to increase production to take advantage of the current profit-maximizing opportunity, the company

must accept market price for its physical capital inputs.

When firms set prices by adding a fixed percentage markup to marginal costs, they are likely

searching for the most advantageous prices to set on the basis of limited information.

To maximize net revenue, a price searcher should

set marginal revenue equal to marginal cost.

For a perfectly competitive firm, the marginal cost curve is identical to the firm's

supply curve

If a firm can increase its sales only by lowering its price, then

the firm is a price searcher. the demand curve for the firm's product is negatively sloped. the firm's marginal revenue will be less than price. all of the above are true.

In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice?

what quantity to produce

Zero economic profits would most likely exist in which market environment?

Perfect competition

From the price-setter's point of view, the appropriate cost of a good is

The Marginal Cost

Government licensing of occupations or trades

is often controlled by firms in the licensed industry to prevent competition.

What happens in a perfectly competitive industry when economic profit is greater than zero?

-existing firms may expand their operations -firms may move along their LRAC curves to new outputs -there may be pressure on the market price to fall -new firms may enter the industry and all of the above

Why are some producers forced to sell their products at the prevailing market price?

-they are very small players in the overall market -high degree of similarity to competitor's products

An _________________ is calculated by subtracting the firm's costs from its total revenues, _______________________________

Accounting profit; excluding oppurtunity cost

What best determines the price a price taker will charge?

Demand

Which of the following would be consistent with the notion of a competitive market process, but would be inconsistent with the notion of perfect competition?

Freedom of entry Price taking behavior Large numbers of buyers and sellers Cost-plus-markup pricing All of the above.

Which of the following clearly restricts the competitive market process?

Legal restrictions on entry

Which of the following clearly restricts the competitive market process? Price taking behavior Price searching behavior Cost-plus-markup pricing Predatory pricing

None of the above

Firms operating in a market situation that creates___________, sell their product in a market with other firms who produce identical or extremely similar products.

Perfect compotition

The term -------------- refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.

Price Taker

If there are 1000 different sellers of a particular good, and they are all charging exactly the same price, that the sellers are probably...

Price Takers

Which conditions must be present for "perfect competition" to occur?

Sellers produce identical products. A large number of buyers and sellers, and all of them enjoy full and complete information. There is a costless mobility of resources. Everybody behaves as a price taker.

Why does a new hardcover Stephen King novel have a higher price than the paperback edition?

The elasticity of demand differs.x

The marginal cost to a grocer of selling avocados, which would have to be thrown away if they are not sold immediately, is approximately

Zero

It is said that in a perfectly competitive market, raising the price of a firm's product from the prevailing market price of $179.00 to $199.00,

could likely result in a notable loss of sales to competitors

A typical corn farmer won't use cost-plus-markup pricing because

he has no control over the market price of corn.

A perfectly competitive industry is a

hypothetical extreme

Economic profit can be derived from calculating total revenues minus all of the firm's costs,_____________

including its opportunity costs

Percentage markups are characteristically lower in supermarkets than in convenience stores because

the demand curves of customers patronizing supermarkets tend to be more elastic.

A typical wheat farmer would never consider cost-plus-markup pricing because

the most profitable price he can ask for is the prevailing market price.

the cost-plus-markup theory is an inadequate explanation of relative prices because

the theory is inconsistent with observable relationships between marginal costs and prices.