FBM study set
At 200 units of output, total cost is $36,000 and total variable cost is $20,000. What does total fixed cost equal at 200 units?
$16,000
A monopolist can sell 15,000 units at a price of $100 per unit. Lowering price by $1 raises the quantity demanded by 500 units. What is the change in total revenue resulting from this price change?
$34,000
A farmer has 1,000 acres on which he has previously grown corn. His yield per acre is 100 bushels of corn. If the corn payment rate is $0.43 a bushel, his production contract payment equals ___.
$36,550
Price rises from $10 to $15, and the quantity demanded falls from 100 units to 90 units. What is the coefficient of the price of elasticity of demand between these two prices?
0.26
If quantity demanded rises by 90 percent as price falls by 40 percent, the coefficient of price elasticity of demand equals ___.
2.25
What will not shift a supply curve?
A change in the good's own price
A normal good is ___.
A good for which the demand rises as income rises
A "quota" is ___.
A legal limit on the amount of a good that can be imported
If an increase in income results in an increase in the demand for chicken, then chicken is ___.
A normal good
At a price above equilibrium price, there is ___.
A surplus
Pete's Burgers has fixed costs of $200. When Pete's Burgers makes 500 hamburgers, their variables costs are $150. When Pete's makes 600 hamburgers their variables costs are $250. The average total cost when they are making 600 hamburgers is ___, and the marginal cost for the range between 500 and 600 hamburgers is ___.
ATC= $0.75: MC= $1.00
Utility means satisfaction; products have what type of utility?
All of the above -form -place -time
Why do you want to know markets cycle?
All of the above -what season you should sell -what day of the week to sell your product -whether the market is going up or down
Some years ago, chemists at 3m corporation were trying to create a super strong glue. Somehow they got their molecules twisted and came up with one of the weakest glues ever made. Rather than pouring it down the drain, they tried coating some paper with it. Voila! The "post-it note" was born. In this case, 3m was acting as ___.
An entrepreneur
If Cassandra bought 16 cotton blouses last year when her income was $40,000 and she buys 24 cotton blouses this year when her income is $35,000, then blouses are ___.
An inferior good
If Max's demand for hot dogs falls as his income rises, then for Max hot dogs are ___.
An inferior good
Suppose that you are evaluating the market for baseball bats. Louisville Slugger produces the Barry Bonds bat. Since his record breaking 73 home runs more kids prefer his bat to any other. What will happen in the market for the Bonds'' bat?
Both the price and quantity will increase
In the theory of perfect competition, ___.
Buyers and sellers of the product know everything that there is to know about the product
A fixed input is an input whose quantity ___.
Cannot be changed as output changes in the short run
Economics is a social science that involves the study of how individuals ___.
Choose among alternatives
When economists speak of scarcity, they are referring to the ___.
Condition in which people's wants outstrip the limited resources available to satisfy those wants
The ___ is King in the market place.
Consumer
If the industry level supply curve shifts right, what result is most likely?
Decrease in price
Suppose that one fixed and one variable input are used to produce good X. As the marginal physical product of the variable input increases, then marginal cost ___.
Decreases
Any time a consumer will take more only at lower prices is ___.
Demand
Price movements over time occur because of ___.
Demand and supply shifts
The law of supply states that the price and quantity supplied are ___.
Directly related, ceteris paribus
The dynamic process of searching for the equilibrium or market-clearing price is ___.
Discovery
Concentration ratios are NOT perfect guides to industry concentration, because they ___.
Do not take into account foreign competition from substitute goods
A "price-taker" is a firm that ___.
Does NOT have the ability to control the price of the product it sells
Average fixed cost ___.
Does not change as output changes and exists only in the short run
In a monopolistically competitive industry, ___.
Each firm in the industry produces a slightly diffrentiated product
___ is not an assumption of the theory of perfect competition.
Each firm produces and sells a differentiated product
A natural monopoly exists when ___.
Economies of scale are so large that only one firm can survive and achieve low unit costs
Markets that quickly and accurately assimilate all available information into market prices are referred to as ___ markets.
Efficient
___ is the best real-world example of monopolistic competition
Electricity generation
If a firm earns a normal profit, then it has generated revenues ___.
Equal to the sum of implicit and explicit costs
If the price of good X falls and the demand for good X is unit elastic, then the percentage rise in quantity demanded is ___ the percentage fall in price, and total revenue___.
Equal to; remains constant
A cost that is incurred when an actual monetary payment is a(n) ___ cost.
Explicit
Is the following true or false?: In the short run, all inputs are fixed inputs
False
Costs that do not change with output are called ___ costs.
Fixed
Which of the following is NOT one of the categories of resources?
Government
The primary purpose of the production Function is to determine___.
How much to produce
What can an agriculture producer determine from the production function?
How much to produce
What does the production function indicate for an agricultural producer?
How output responds to inputs
The cost of resources used in production for which no actual monetary payment is made is a(n) ___ cost.
Implicit
A tariff tax is on ___.
Imports
If the percentage change in quantity demanded of a good is less than the percentage change in income, then the good is said to be ___.
Income inelastic
If the percentage in quantity demanded of a good is equal to the percentage change in income, then the good is said to be ___.
Income unit elastic
The law of demand states that price and quantity demanded are ___.
Inversely related, ceteris paribus
The marginal cost of making the 100th unit is $50 and the average total cost of the 100th unit is $100. What do we know about the average total cost curve at a quantity of 100?
It is falling (decreasing)
If a monopolistically competitive firm raises its price, then ___.
It should expect to lose some, but not all, of its consumers
The operator knows that the value of the dollar on the world market can have an impact on grain markets. If the dollar increases in value related to other currencies, it will impact U.S. corn and wheat prices in what way?
Make corn and wheat prices higher on world market
The middlemen in the marketing system operate on ___.
Margin
The rule of profit maximization says that firms should produce at the point where ___.
Marginal revenue equals marginal cost
Comparing the retail price to the farm price for an agricultural commodity allows you to determine the portion of each dollar spent at the retail level that farmers receive for their commodities. The difference between retail value and farm value is ___.
Marketing margin
At a price of $15, Marta buys 3 CD's per month. When the price increases to $20, Marta buys 2 CD's per month. Luz says that Marta's demand for CD's has decreased. Is Luz correct?
No, Luz is incorrect. Marta's quantity demanded has decreased, but her demand has stayed the same
A monopoly may exist because ___.
One firm has the exclusive ownership of a secure resource.
An agriculture producer learns what from the production function?
Output responses to an input
One major reason for the law of demand is that ___.
People substitute relatively lower-priced goods for relatively higher-priced goods
A concentration ration indicates the ___.
Percentage of total sales accounted for by the (for example) four larger firms
If quantity demanded is completely unresponsive to changes in price, demand is ___.
Perfectly inelastic
Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in ___.
Price
Suppose that the supply curve shifts right. What is the most likely effect on price and quantity?
Price will decrease and quantity will increase
The point on a production function graph where marginal cost equals marginal revenue is where ___.
Profits will be the greatest
A farmer who is willing to pay a set dollar amount to establish floor or base price is to be received would do what?
Purchase a put option
On a chart, a line that connects all the high points as the market moves higher forms a trend line. When projected out, it forms points of ___.
Resistance
An increase in the number of buyers in an area will result in a ___.
Rightward shift in the demandcurve
Real-world markets that approximate the four assumptions of the theory of perfect competition include ___.
Some agricultural markets and the stock market
The two most important driving factors that influence the market price are ___.
Supply and demand
It is impossible to be competitive in the complex commodity market place without___.
The ability to collect accurate data
What does stage two in production function graph determine?
The amount of variable input to use
What does marginal cost measure?
The change in cost by adding another unit of input
What is stage 2 of the production function?
The decision making stage
Derived Demand
The demand for product at the farm level
What is the law of supply?
The higher the price the, the higher the quantity supplied will be
The fewer substitutes for a good, ___.
The lower its price elasticity of demand
Equilibrium
The price where demand and supply intersect
Demand
The relationship between quantity purchased and price
Supply Curve
The relationship between quantity supplied and price
In the theory of perfect competition, ___.
The single firm's demand curve is horizontal
Economic profit is the difference between total revenue and ___.
The sum of explicit and implicit costs
"Entrepreneurship" is ___.
The talent of organizing the use of land, labor, and capital, among other things
Tobacco production is one of the more heavily subsidizes industries in the United States. Suppose that as a result of intense lobbying from health-related concerns, Congress repeals the tobacco farms' subsidies. What scenario would most likely occur?
The tobacco farms' supply curve would shift leftward, since it would now cost more to produce each level of output
The N.M Corporation has exactly the same amount of production as last year except for fixed costs, which are $50,000 this year compared to $30,000 last year. ___ is False.
The total cost curve will be the same this year as last year
If the wage rate increases, ___ will not happen.
The total fixed cost curve shifting up
___ are correct assumptions of oligopoly
There are barriers to entry and firms produce and sell either homogeneous or differentiated products
Which of the following is true about the relationship between price and quantity supplied?
There is usually a direct relationship
If the percentage change in quantity demanded is equal to the percentage change in price, demand is ___.
Unit elastic
When a market has huge swings on a daily basis, it is described as ___.
Volatile
On a supply-and-demand diagram, equilibrium is found___.
Where the demand and supply curves intersect
Five months ago Wilson opened up a health club. Which of the following is an implicit cost related to the health club?
Wilson previously worked as an accountant, earning $3,000 a month
Is the following true?: Accounting profit is the difference between total revenue and explicit costs
Yes
When an increase in the level of production of one enterprise causes a reduction in the level of production in another enterprise, these two enterprises are said to be ___.
competitive
Which of the following terms describes this situation: Quantity taken will increase only if the price comes down?
demand
Is the following true?: Money must change hands before a cost can be incurred.
no
Direct Marketing
selling through a farmers' market
An unrecoverable cost that should be disregarded in any way current or future decision is also called a(n) ___ cost.
sunk
The point where marginal costs = marginal revenue is ___.
where profits are at a maximum
Is the following true?: In the short run, changes in output can only be brought about by a change in the quantity of variable inputs
yes
