Econ final

The long-run market supply curve in a competitive market will

typically be more elastic than the short-run supply curve.

A firm cannot price discriminate if

it operates in a competitive market.

A firm that shuts down temporarily has to pay

its fixed costs but not its variable costs.

Suppose that a "doggie day care" firm uses only two inputs: hourly workers (labor) and a building (capital). In the short run, the firm most likely considers

labor to be variable and capital to be fixed.

Lamar is an organic lettuce farmer, but he also spends part of his day as a professional organizing consultant. As a consultant, Lamar helps people organize their houses. Due to the popularity of her home-organization services, Farmer Lamar has more clients requesting his services than he has time to help if he maintains his farming business. Farmer Lamar charges $25 an hour for his home-organization services. One spring day, Lamar spends 9 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of lettuce. Refer to Scenario 13-3.Lamar's accounting profit from farming equals

$170.

Suppose a firm in a competitive market earned $2,000 in total revenue and had a marginal revenue of $20 for the last unit produced and sold. What is the average revenue per unit, and how many units were sold?

$20 and 100 units

Refer to Table 13-2. At which number of workers does diminishing marginal product begin?

1

Refer to Table 15-2. The monopolist has fixed costs of $1,000 and has a constant marginal cost of $2 per unit. If the monopolist were able to perfectly price discriminate, how many units would it sell?

900

Which of the following is not an example of price discrimination?

A donut shop charges a higher price for donuts than for bagels.

When a firm experiences constant returns to scale,

Assuming that implicit costs are positive, accounting profit is greater than economic profit.

Refer to Figure 13-3. Why doesn't the total cost curve begin at the origin (the point 0,0)?

Because fixed costs are positive when output is zero

Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25,000. In her first year, Bev's revenues were $30,000, and she spent $1,000 on materials and supplies. Which of the following statements is correct?

Bev's economic profit is $3,700.

Refer to Figure 13-3. Which of the following can be inferred from the figure above?

Marginal product is increasing at low level of output and decreasing at high level of output.

For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?

The cost of the steel that is used in producing automobiles

Refer to Figure 15-6. What is the monopoly price and quantity?

Price = Q; quantity = T

Which of the following statements is true?

When a monopoly firm sells an additional unit of output, its revenue increases by an amount less than the price.

When marginal cost is less than average total cost,

average total cost is falling.

A monopoly can earn positive profits because it

can maintain a price such that total revenues will exceed total costs.

For a firm, marginal revenue minus marginal cost is equal to

change in profit.

When a factory is operating in the short run,

it cannot adjust the quantity of fixed inputs.

Whenever a perfectly competitive firm chooses to change its level of output, its marginal revenue

does not change

Refer to Figure 13-6. At levels of output less than P, the firm experiences

economies of scale.

A benefit to society of the patent and copyright laws is that those laws

encourage creative activity.

Refer to Figure 14-7. When the market is in long-run equilibrium at point W in graph (b), the firm represented in graph (a) will

have a zero economic profit.

In a natural monopoly,

if the government requires marginal cost pricing, it will likely have to subsidize the firm.

Price discrimination adds to social welfare in the form of

increased total surplus.

Suppose that a firm in a competitive market has the following cost curves:

negative economic profits in the short run but remain in business.

Total cost is the

quantity of output minus the quantity of inputs used to make a good.

If a firm uses labor to produce output, the firm's production function depicts the relationship between

the number of workers and the quantity of output.

Scenario 13-3 Lamar is an organic lettuce farmer, but he also spends part of his day as a professional organizing consultant. As a consultant, Lamar helps people organize their houses. Due to the popularity of her home-organization services, Farmer Lamar has more clients requesting his services than he has time to help if he maintains his farming business. Farmer Lamar charges $25 an hour for his home-organization services. One spring day, Lamar spends 9 hours in his fields planting $130 worth of seeds on his farm. He expects that the seeds he planted will yield $300 worth of lettuce. Refer to Scenario 13-3. Lamar's economic profit from farming equals

−$55.