Econ Test 2 Review

Oligopoly is defined as having Low Barriers to Entry. No market power. Many, many, many firms. A few interdependent firms who are keenly aware of each other's strategies.

A few interdependent firms who are keenly aware of each other's strategies.

the shutdown of a firm will occur if the price is equal to

AVC

as the output of a firm continues to rise, the AFC continues to..

Decline

which cost doesn't change when output changes in the short run?

Fixed costs

a firm will produce a level of output on a graph where..

MC meets with the Price

which type of market does a single firm have the most power?

Monopoly

profit per unit is equal to

P - ATC

a perfectly competitive firm should expand output when

P > MC

A perfectly competitive firm will maximize profits by choosing an output level where Price equals total cost. Price equals marginal cost. Price is greater than marginal cost. Price is greater than total cost

Price equals marginal cost

A perfectly competitive firm will maximize profits by choosing an output level where..

Price equals marginal cost

competitive firms CANNOT individually affect market price because There is an infinite demand for their goods. Their individual production is insignificant relative to the production of the industry. The government exercises control over the market power of competitive firms. Demand is perfectly inelastic for their goods.

Their individual production is insignificant relative to the production of the industry.

True or False diminishing marginal returns will appear when you begin to see a decline in the different between the output.

True

A firm should shutdown at any price below which price on a graph?

Where AVC hits the lowest point on the graph

an oligopoly is defined as having

a few inderdependent firms who are keenly aware of each other's strategies

if a firm produces a level of output at a point on the graph that is marked on the marketprice, but is lower in quantity it will earn.. A profit, although not the maximum profit possible. A loss greater than necessary. The minimum loss possible. The maximum profit possible.

a loss greater than necessary

Economies of scale occur when The firm uses more specialized technology or equipment in production. Labor and management specialize in their activities more. The firm can take advantage of volume discounts. All of the above are correct.

all of the above are correct

For the perfectly competitive firm, the marginal revenue is always

constant

For the perfectly competitive firm, the marginal revenue is always Increasing. Constant. Equal to average total cost. Decreasing.

constant

When a producer can control the market price for the good it sells, the producer: Has market power. Is an entrepreneur. Is a perfectly competitive firm. Is certain to make a profit. #23

has market power

when a producer can control the market price for the good it sells, the producer:

has market power

greater labor productivity means Higher labor cost per unit of output. Higher output per worker. Lower output per worker. Lower output per labor-hour.

higher output per worker

In order to sell additional units of their product, competitive firms must: Increase their advertising. Lower their price. Cut their expenses. Increase output #5

increase output

in order to sell additional units of their product, competitive firms must

increase output

If the market price of an item is $10 and the AVC is either at or below the price of $10, the firm will..

incur a loss. this is because the item is going to cost more to make then the selling price.

variable costs

labor Material costs

In the short run, which of the following is most likely a variable cost? Property taxes. Income taxes. Labor and raw materials costs. Contractual lease payments.

labor and raw materials costs

A U-shaped average total cost curve implies the first

marginal cost below average total cost, and then marginal cost above average total cost

a perfectly competitive firm will maximize profits by choosing an output level where Price is greater than marginal cost. Price equals marginal cost. Price is greater than total cost. Price equals total cost

price equals marginal cost

If a firm produces a level of output at the marketprice, it will earn.. A profit, although not the maximum profit possible. A loss greater than necessary. The minimum loss possible. The maximum profit possible.

the minimum loss possible

competitive firms cannot individually affect market price because..

their individual production is insignificant relative to the production of the industry.

Economies of scale happen when..

use of larger machines Specialization: technology, equipment, labor Volume discounts