microeconomics 8

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

average cost

A manufacturer would likely make an ___________ in a market following the long-run process of beginning and expanding production in response to ________________ . entry; a sustained pattern of profits

entry; a sustained pattern of profits

Under perfect competition, any profit-maximizing producer faces a market price equal to its

marginal costs

In economic terms, a practical approach to maximizing profits requires an examination of how changes in production affect ________________ and ________________ .

marginal revenue; marginal cost

Firms operating in a market situation that creates ___________________, sell their product in a market with other firms who produce identical or extremely similar products.

perfect competition

When a business adopts a strategy of reducing and/or discontinuing production in response to a sustained pattern of losses, it is

preparing to exit operations

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

The term _________________ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.

price taker

In the _________, if profits are not possible, the perfectly competitive firm will seek out the quantity of output where _____________________ .

short run; losses are smallest

In the _________, the perfectly competitive firm will seek out ________________________ .

short run; the quantity of output where profits are highest

If a firm's revenues do not cover its average variable costs, then that firm has reached its _________________

shutdown point

In a free market economy, firms operating in a perfectly competitive industry are said to have only one major choice to make. Which of the following correctly sets out that choice?

what quantity to produce

In economics, labor demanded is synonymous with

Devrived demand

An _________________ is calculated by subtracting the firm's costs from its total revenues, _______________________________

Accounting profit; excluding oppurtunity cost

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 recongnize

If the price that a firm charges is higher than its ________________ cost of production for that quantity produced, then the firm will earn profits.

Average

Why are some producers forced to sell their products at the prevailing market price?

High degree of similarity to competitor's products

A perfectly competitive industry is a

Hypothetical extreme

Kate's 24-Hour Breakfast Diner menu offers one item, a $5.00 breakfast special. Kate's costs for servers, cooks, electricity, food, etc. average out to $3.95 per meal. Her costs for rent, insurance cleaning supplies and business license average out to $1.25 per meal. Since the market is highly competitive, Kate should

Keep the business open in the short run, but plan to go out of business in the long run

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

Long run; increasing its production

In economics, the term "shutdown point" refers to the point where the

Marginal cost curve crosses the average variable cost curve

If a perfectly competitive firm is a price taker, then

Pressure from competing firms will force acceptance of the prevailing market price

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

including its opportunity costs.

It is said that in a perfectly competitive market, raising the price of a firm's product from the prevailing market price of $179.00 to $199.00, ____________________.

could likely result in a notable loss of sales to competitors

I'maSolarPanelCo. manufactures and distributes solar panels in the US market. Two years ago, it had 5 US competitors, but government stimulus in the industry has encouraged 7 new US competitors to enter the market. In these circumstances, I'maSolarPanelCo.'s price for its output

is dictated by the forces of demand and supply.

______________________ refers to the additional revenue gained from selling one more unit.

marginal revenue

Why would a profit-seeking firm need to tailor its decisions about the quantity of labor inputs that it purchases?

to produce the highest profitable quantity of output at the lowest possible marginal cost