ECON Exam 2 Questions
Marginal Utility:
Declines with each additional utility
Which of the answer choices lists market structures in order from the highest number of sellers to the lowest?
Perfect comp......
Limited liability is important in encouraging institution that transforms ____ of production into ____ for consumers:
it lowers risk
product differentiation:
reduces price elasticity of demand
A natural monopoly could possibly arise when:
there are large economies of scale
Suppose that Bob has left a job that paid $50,000 per year in order to open a new sponge business. His insurance cost is $5,000, his materials cost $25,000, his lease is $10,000 and his sales revenue is $90,000. Bob's economic profit is:
$0
Based on the graph, if the marginal cost of production is constant at $20 per unit produced, then the monopolist will earn a profit of:
$800
Based on the table, the marginal cost of the fourth unit produced is:
$98
A consumer has 30 to spend on movies or books. Based on the table, the consumer has maximized his utility at which combination of goods?
2 movies, 6 books
Based on graph.... Monopolist would produce—— while perfect competitors would produce——. :
20 units; 40 units
A monopolist will maximize:
MR=MC
Sunk cost:
Rose bought a mattress
The idea that each additional unit offers less additional satisfaction when additional units of product are consumed is known as:
diminishing marginal utility
All of these are included in implicit cost, EXCEPT:
expenditures for raw materaials
Based on the graph under monopolistic competition the price for this good or service will be:
f
A monopolist charges a price of
higher; less
As a person consumes more of a particular good or service, the total level of utility derived from that consumption will:
increase at a decreasing rate
A firm is an economic institution that transforms ____ of production into ____ for consumers:
inputs; outputs
Which sequence describes the long run adjustment process:
new firms enter, industry supply inc, market price ---
In the long run perfectly competitive firms earn:
normal profits
Before deciding on pricing strategy, Worldwide Widgets consults with its market intelligence team to understand what discounts the Gargantuan Gizmo Company is offering. The model that BEST fits this industry is:
oligopoly
Which of these is NOT typical in the long run?
output will vary only with changes in the labor force
the demand curve for an individually perfect competition
perfectly elastic
A perfectly competitive firm:
price is below the average variable cost at all rates of output
____ is the process by which products are produced and sold to consumers at their lowest opportunity cost.
productive efficiency
Assume that at a given level of output, a monopoly firm has marginal revenue of $9, its average total cost is $9, and marginal cost is $7. If this firm were to continually increase its output, then:
profits will increase
If you drop a course after the refund date, the non-refundable tuition that you have paid is:
sunk cost
The demand curve that the monopolist face is:
the market demand curve
In general, marginal product equals average product at:
the maximum average product
All of these are explicit costs, EXCEPT:
the salary an entrepreneur could have earned in a corporate job
Sole proprietors and partnerships share the characteristics of:
unlimited liability
The idea that monopolies
x-inefficiency
Normal profit is equal to:
zero economic proft
one way to achieve product differentiation:
clever product labeling and labeling always
Which of these is NOT a characteristic of a monopoly?
close substitutes for the monopolist product are available to buyers
If a perfectly competitive firm is incurring an economic loss it should:
continue
