microeconomics exam 3
which of the following curves is not U shaped
AFC
true or false: the short run is a period of time during which all costs are fixed costs
FALSE
true or false: variable costs are costs that vary directly with output
TRUE
a purely competitive seller is
a "price taker"
which of the following is a short run adjustment?
a local bakery hire two additional bakers
an explicit cost is
a money payment made for resources not owned by the firm itself
which of the following industries most closesly approximate pure competition?
agriculture
in the long run
all costs are variable costs
fixed cost is
any cost which does not change when the firm changes its output
the law of diminishing returns indicates that
as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point
the short run is characterized by
at least one fixed variable
if you opened a small bakery, which of the following would be a variable cost in the short run?
baking supplies (flour,salt, etc.)
under pure competition in the long run
both allocative efficiency and productive efficiency are achieved
marginal cost is the
change in the total cost that results from producing one more unit of output
average fixed cost
declines continually as output increases
which of the following is most likely to be an implicit cost for company X
depreciation charges on company owned equipment
total fixed cost (TFC)
does not change as total output increases or decreases
economic profits are calculated by subtracting
explicit and implicit costs from total revenue
which of the following is most likely to be a variable cost?
fuel and power payments
a constant cost industry is one in which
if 100 units can be produced for $100, then 150 can be produced for $150 and so on
implicit and explicit costs are different in that
implicits refer to non expenditure costs and explicit to out-of-pocket costs
the basic difference between the short run and long the long run is
in short run atleast one resource is fixed, while in long run all resources are variable
to economists, the main difference between the short run and the long run is
in the long run all resources are variable, while in the short run at lease one resource is fixed
the loss of a purely competitive firm which shuts down in the short run
is equal to its total fixed costs
if a firm decides to produce no output in the short run, its costs will be
its fixed costs
costs to an economist
may or may not involve monetary outlays
implicit costs are
non expenditure costs
the demand schedule or curve confronted by the individual purely competitive firm is
perfectly elastic
which of the following is most likely to be a fixed cost?
property insurance premiums
an industry comprised of a very large number of sellers producing a standardized product is known as
pure competition
the long run is characterized by
the ability of the firm to change its plant size
the basic characteristic of the short run is that
the firm does not have sufficient time to change the size of its plant
if a variable input is added to some fixed input, beyond some point the resulting extra output will decline. this state ment describes
the law of diminishing returns
fixed costs are associated with
the short run only
in a purely competitive industry
there may be economic profits in the short run, but not in the long run
economists use the term imperfect competition to describe
those markets which are not purely competitive
a firm reaches a break-even point (normal profit position) where
total revenue and total cost are equal
the amount of calendar time associated with the long run
varies from industry to industry
