Micro

A monopolistic competitor has the information on cost and demand presented in Table 10-8. What will the firm s profits equal in the long run?

$0

Refer to Figure 5-1. With reference to Graph B, at a price of $5, total revenue equals:

$200.

In order to produce 100 pairs of oven gloves, Marcia incurs an average total cost of $2.50 per pair. Marcia s marginal cost is constant at $10.00 for every pair of oven gloves produced. The total cost to produce 50 pairs of oven gloves is

$200.00

In the circular flow diagram model:

-households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses. -businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households.

The leader of a federal political party made the following campaign promise: "My administration will increase national defense without requiring sacrifices elsewhere in the economy." The promise can be kept if:

-the economy moves from a point inside the production possibilities curve toward a point on the production possibilities curve. -the production possibilities frontier shifts outward due to an improvement in technology.

In the United States, a pharmaceutical company's exclusive patent rights last for

20 years.

_____________________ help to explain why every economy, as it develops, has an increasing proportion of its population living in urban areas.

Agglomeration factors

_____________ occurs when circumstances have allowed several large firms to have all or most of the sales in an industry.

An oligopoly

____________ tells a firm whether it can earn profits given the price in the market.

Average cost

How does the U.S. Bureau of Labor Statistics gather information with regard to the typical consumption choices of Americans?

Consumer Expenditure Survey

In countries like _____________ the command economy predominates.

Cuba and North Korea

__________________ law implies ownership over an idea or concept or image

Intellectual property

______________ include all of the costs of production that increase with the quantity produced.

Variable costs

When P > MC in a monopolistically competitive market, that industry will most likely produce ______________________ than would be found in a perfectly competitive industry.

a lower quantity of a good and charge a higher price

In terms of microeconomic analysis, what is the function of "utils"?

a measurement of utility

When demand is inelastic:

consumers are not very responsive to changes in price.

Intellectual property law is a body of law that includes

copyright legislation, as well as all of the above

A 10 percent increase in the price of soda leads to a 20 percent increase in the quantity of iced tea demanded. It appears that:

cross-price elasticity of demand for iced tea is -2.

The fact that a consumer is not required to buy the goods that a given firm produces, as well as the fact that the consumer might want the goods a firm produces, but may choose to buy from other firms instead

are two stark realities any business firm must recognize.

Graph 7-1 illustrates the total cost function for GoodieCookie Co. How are the company's fixed costs represented in this graph?

as the point where the total cost curve touches the vertical axis

If the price that a firm charges is lower than its ____________ of production, the firm will suffer losses.

average cost

The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation.

average variable cost; fixed costs

The desire of businesses to __________________________, so that they can raise the prices that they charge and earn higher profits, has been well-understood by economists for a long time.

avoid competing with each other

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good

budget constraint

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers.

Oligopoly firms acting individually may seek to gain profits ___________________________ .

by expanding levels of output and cutting prices

If a firm is producing so that the point chosen along the production possibility frontier is socially preferred, then that firm is said to have reached its

allocative efficiency

Perfect competition displays _____________________ because the social benefits of additional production, as measured by the price that people are willing to pay, are in balance with the ____________ to society of that production.

allocative efficiency; marginal costs

In the framework of an oligopoly, what strategy can work like a silent form of cooperation?

always match other cartel firms' price cuts, but dont match price increases

Substitution and income effects of a change in price of a good may be used to explain the:

direct relationship between income and demand.

The slope of the demand curve for a monopoly firm is

downward sloping

The demand curve as perceived by a monopolistic competitor is ______________ .

downward-sloping

Copyright protection legislation provides protection for original works

during the author's life plus 70 years

The future of cities in the United States and in other countries will be determined by their ability to benefit from the _________________ and to minimize or counterbalance the ______________________.

economies of agglomeration; corresponding diseconomies

Supply is said to be ____________ when the quantity supplied is very responsive to changes in price.

elastic

When economists are sketching examples of a demand or supply curve that is close to horizontal, they refer to that demand or supply curve as ____________.

elastic

Youth smoking seems to be more __________ than adult smoking that is, the quantity of youth smoking will fall by a greater percentage than the quantity of adult smoking in response to a given percentage increase in price.

elastic

The government wants to make medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing medicare budget. The two areas where they are considering cuts are non-essential elective surgery and 6-12 month mental health care programs. Applying the concept of diminishing marginal utility, the budget cuts should be made for spending on:

elective surgery due to its lower marginal return rate.

If the North American newsprint paper market has barriers to entry, then

entry will be blocked even if firms are earning high profits.

Which of the following is generally accepted as a valid criticism of the production of useful goods and services?

environmental pollution

If the supply curve for a product is horizontal, then the elasticity of supply is:

equal to infinity.

The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price.

equilibrium quantity

The demand curve as perceived by a perfectly competitive firm is __________ .

flat

In the ______________, households receive goods and services and pay firms for them.

goods and services market

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made.

government

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

including its opportunity costs.

When economists attempt to predict the spending patterns of U.S. households, they will typically view the _____________________ as a primary determining factor that influences the individual consumption choices that each will make.

income level of each household

The demand schedule for a good:

indicates the quantities that will be purchased at alternative market prices.

The key assumption that accompanies the use of numbers for measuring utility is that:

individuals choose based on their preferences.

Refer to Figure 5-1. Graph B represents a demand curve that is relatively __________. Total revenue __________ as the price decreases from $10 to $5.

inelastic; decreases

Taxes on goods with __________ demand curves will tend to raise more tax revenue for the government than taxes on goods with __________ demand curves.

inelastic; elastic

Saving money is a(n) ____________________, because it involves less consumption in the present, but the ability to consume more in the future.

intertemporal choice

The opportunity cost of an action:

is a subjective valuation that can be determined only by the individual who chooses the action.

The economies-of-scale curve is a long-run average cost curve, because

it allows all factors of production to change.

In the ________, the perfectly competitive firm will react to losses by __________________________ .

long run; reducing production or shutting down

As a person receives more of a good, the _______________ from each additional unit of the good declines.

marginal utility

A decrease in consumer preference for a product, other things being equal, will cause:

market demand to shift to the left.

If new manufacturers enter the computer industry, then (ceteris paribus):

the supply curve shifts to the right.

When quantity demanded decreases in response to a change in price:

there is a movement up along the demand curve.

For a pure monopoly to exist,

there is a single seller in a particular industry

Graph 7-4 illustrates the electricity market. Consider market competition between firms where price is based on AR and select the most appropriate answer.

this market is imperfectly competitive with excess profits possible in the short-run

A monopolistically competitive firm may earn abnormally high profits in the

short term, but the process of entry will drive those profits to zero in the long run.

Whatever the firm s quantity of production, _____________ must exceed total costs if it is to earn a profit.

total revenue

If a paper mill shuts down its operations for three months so that it produces nothing, its __________________ will be reduced to zero?

variable costs

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

supply curve

In monopolistic competition, the end result of entry and exist is that firms end up with a price that lies

on the downward-sloping portion of the average cost curve.

Approximately what portion of annual consumption is typically spent by American households on shelter?

one-third

In many cases, it is reasonable to refer to the ________________ as the price.

opportunity cost

Roughly speaking, patent law covers __________ and __________ law protects an author's original books.

original inventive creations; copyright

Government ______________ regulations specify that inventors will maintain exclusive legal rights to their respective inventions for ______________ .

patent; a limited time

If the quality differences of similar products are mostly imperceptible to the average consumer's eyes, which of the following will most likely play a major role in influencing the decisions of purchasers?

price of competing products

A monopolist is able to maximize its profits by

producing output where MR = MC and charging a price along the demand curve.

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.

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, shown on the horizontal axis.

quantity

If a graph is used to compare total revenue and total cost of a perfectly competitive firm, then the horizontal axis of the graph will represent the _______________ and the vertical axis will represent ______________________ .

quantity produced; both total revenue and total costs, measured in dollars.

The theoretical model of the intertemporal budget constraint for the U.S. economy as a whole suggests that the most common pattern seems to be that:

the quantity of savings doesn't adjust much to changes in the rate of return.

___________ include all spending on labor, machinery, tools, and supplies purchased from other firms.

Total costs

Refer to Figure 2-1. The most inefficient point depicted is:

Point G

Which of the following is most unlikely to present a barrier to entry into a market?

deregulation

In economics, labor demand is synonymous with

derived demand.

If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to:

rise and the equilibrium quantity to stay the same.

The ________________ arises when a price changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price.

substitution effect