1. (Points: 1.0) Which of the following statements about the short-run is true?
ID: 1254668 • Letter: 1
Question
1. (Points: 1.0)Which of the following statements about the short-run is true?
1. Average variable cost increases as output increases.
2. Average fixed cost decreases as output increases.
3. Marginal cost is constant due the existence of fixed inputs.
4. Average fixed cost is the same regardless of output.
5. Total fixed cost increases as output increases.
2. (Points: 1.0)
According to the relationship between MC and ATC,
1. Marginal falls if average is below marginal.
2. Average falls if marginal is below average.
3. Average rises if marginal rises.
4. Marginal rises if average is above marginal.
5. Average rises if marginal falls.
3. (Points: 1.0)
For a firm that uses only two factors of production, Capital (K), and Labor (L), we showed in class that we can compute marginal cost as MC=wage/MPL. Then, if the firm cannot change the wage it pays its worker, and if the marginal product of labor (MPL) is decreasing, ………
1. As output increases, MC should decrease, and then increase after reaching a minimum.
2. MC should decrease as output increases
3. MC should stay the same regardless of output.
4. MC should increase as output increases
5. MC should increase as output decreases.
4. (Points: 1.0)
The primary objective of a monopolist is to
1. maximize profits.
2. minimize total costs.
3. maximize the deadweight loss to society.
4. maximize total revenues.
5. charge the highest possible price.
5. (Points: 1.0)
Both the perfectly competitive firm and the monopolist find that
1. price is less than marginal revenue.
2. they can sell all they want to at the market price.
3. price and marginal revenue are the same.
4. it is best to expand production until the benefits and costs of the last unit produced are equal.
5. demand is less than perfectly elastic.
6. (Points: 1.0)
If a firm collects $80 in revenues when it sells 4 units, $100 in revenues when it sells 5 units, and $120 when it sells 6 units, one can infer the firm is more likely to be
1. a monopolistic competitor.
2. a monopolist.
3. an oligopolist.
4. a perfect competitor.
5. a perfect competitor or a monopolist.
8. (Points: 1.0)
The profit maximizing rule MR=MC applies to
1. both pure monopolists and perfect competitors.
2. all firm types except perfect competitors.
3. perfect competitors only.
4. monopolists only.
5. all firms.
11. (Points: 1.0)
Price discrimination means charging
1. different prices to different consumers when production costs are the same.
2. higher prices to women and minorities
3. the same consumers the same price.
4. the same price to all consumers because production costs are different.
5. different prices to different consumers because production costs are different.
12. (Points: 1.0)
If a natural monopoly sets price equal to its marginal cost it will ..........
1. incur an economic loss
2. earn an economic profit
3. earn zero economic profit
4. earn an accounting profit
5. earn a normal profit
13. (Points: 1.0)
Which of the following is LEAST likely to involve an external cost (negative externality)
1. Landing aircraft at airports.
2. Talking during a movie.
3. Eating bread at home.
4. Smoking in a restaurant.
5. Driving an automobile on city streets.
14. (Points: 1.0)
Which of the following is NOT a condition of monopolistic competition?
1. Each seller's product is slightly different from that offered by other sellers.
2. Each firm faces a downward-sloping demand curve.
3. There must be numerous small buyers and sellers.
4. Barriers to entry exist.
15. (Points: 1.0)
A perfectly competitive firm in a market that is in long run equilibrium is producing 5 custom-made accounting templates at a total cost (including opportunity costs) of $5,500. What must be the price of a custom-made accounting template?
1. We can't tell from this information, since we don't have information about the firm's MARGINAL cost.
2. It must be more than $1,100, so the firm can make some profit.
3. It is determined by the intersection of this firm's supply curve and the market demand curve.
4. It must be equal to $1,100, so that revenues are $5,500.
16. (Points: 1.0)
Under monopolistic competition demand and marginal revenue are downward-sloping because
1. product differentiation allows each firm a small degree of monopoly power.
2. demand and marginal revenue curves are always downward-sloping.
3. there are a few large firms in the industry and each has monopoly power over prices.
4. there is free entry into and exit out of the market.
5. mutual interdependence between all firms in the industry lead to informal collusion.
Explanation / Answer
Which of the following statements about the short-run is true?
1. Average variable cost increases as output increases.
2. Average fixed cost decreases as output increases.
3. Marginal cost is constant due the existence of fixed inputs.
4. Average fixed cost is the same regardless of output.
5. Total fixed cost increases as output increases.
2. (Points: 1.0)
According to the relationship between MC and ATC,
1. Marginal falls if average is below marginal.
2. Average falls if marginal is below average.
3. Average rises if marginal rises.
4. Marginal rises if average is above marginal.
5. Average rises if marginal falls.
3. (Points: 1.0)
For a firm that uses only two factors of production, Capital (K), and Labor (L), we showed in class that we can compute marginal cost as MC=wage/MPL. Then, if the firm cannot change the wage it pays its worker, and if the marginal product of labor (MPL) is decreasing, ………
1. As output increases, MC should decrease, and then increase after reaching a minimum.
2. MC should decrease as output increases
3. MC should stay the same regardless of output.
4. MC should increase as output increases
5. MC should increase as output decreases.
4. (Points: 1.0)
The primary objective of a monopolist is to
1. maximize profits.
2. minimize total costs.
3. maximize the deadweight loss to society.
4. maximize total revenues.
5. charge the highest possible price.
5. (Points: 1.0)
Both the perfectly competitive firm and the monopolist find that
1. price is less than marginal revenue.
2. they can sell all they want to at the market price.
3. price and marginal revenue are the same.
4. it is best to expand production until the benefits and costs of the last unit produced are equal.
5. demand is less than perfectly elastic.
6. (Points: 1.0)
If a firm collects $80 in revenues when it sells 4 units, $100 in revenues when it sells 5 units, and $120 when it sells 6 units, one can infer the firm is more likely to be
1. a monopolistic competitor.
2. a monopolist.
3. an oligopolist.
4. a perfect competitor.
5. a perfect competitor or a monopolist.
8. (Points: 1.0)
The profit maximizing rule MR=MC applies to
1. both pure monopolists and perfect competitors.
2. all firm types except perfect competitors.
3. perfect competitors only.
4. monopolists only.
5. all firms.
11. (Points: 1.0)
Price discrimination means charging
1. different prices to different consumers when production costs are the same.
2. higher prices to women and minorities
3. the same consumers the same price.
4. the same price to all consumers because production costs are different.
5. different prices to different consumers because production costs are different.
12. (Points: 1.0)
If a natural monopoly sets price equal to its marginal cost it will ..........
1. incur an economic loss
2. earn an economic profit
3. earn zero economic profit
4. earn an accounting profit
5. earn a normal profit
13. (Points: 1.0)
Which of the following is LEAST likely to involve an external cost (negative externality)
1. Landing aircraft at airports.
2. Talking during a movie.
3. Eating bread at home.
4. Smoking in a restaurant.
5. Driving an automobile on city streets.
14. (Points: 1.0)
Which of the following is NOT a condition of monopolistic competition?
1. Each seller's product is slightly different from that offered by other sellers.
2. Each firm faces a downward-sloping demand curve.
3. There must be numerous small buyers and sellers.
4. Barriers to entry exist.
15. (Points: 1.0)
A perfectly competitive firm in a market that is in long run equilibrium is producing 5 custom-made accounting templates at a total cost (including opportunity costs) of $5,500. What must be the price of a custom-made accounting template?
1. We can't tell from this information, since we don't have information about the firm's MARGINAL cost.
2. It must be more than $1,100, so the firm can make some profit.
3. It is determined by the intersection of this firm's supply curve and the market demand curve.
4. It must be equal to $1,100, so that revenues are $5,500.
16. (Points: 1.0)
Under monopolistic competition demand and marginal revenue are downward-sloping because
1. product differentiation allows each firm a small degree of monopoly power.
2. demand and marginal revenue curves are always downward-sloping.
3. there are a few large firms in the industry and each has monopoly power over prices.
4. there is free entry into and exit out of the market.
5. mutual interdependence between all firms in the industry lead to informal collusion.
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