1. (Points: 1.0) Which of the following statements about the short-run is true?
ID: 1254679 • 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.
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.
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
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.
6. (Points: 1.0)
Which ordering best describes how a perfectly competitive industry (characterized by constant cost) would respond to a sudden increase in popularity of the product? The market demand curve will shift to the right causing the market
1. price to increase, and all firms in the industry will earn higher profits at lower quantities of output.
2. price to increase. Increased profits will encourage new firms to enter the market. The market supply curve will shift to the right. When the market returns to its long-run equilibrium, quantity will be higher, but price will be the same as before the surge.
3. price to increase, and a new long-run equilibrium to be established at a higher price and a higher quantity.
4. price and quantity to increase. The market supply curve will shift to the left and the new long-run market equilibrium will be at a a higher price, but at the same quantity as before the surge.
5. price and quantity to increase. Increased profits will encourage new firms to enter the industry. The market supply curve shifts to the right. The new long-run market equilibrium will be at a higher quantity and higher price than before the surge in popularity.
9. (Points: 1.0)
Private incentives in markets with external benefits lead to ………… while private incentives in markets with external costs lead to ………..
1. deadweight loss; deadweight loss
2. excess total economic surplus; efficiency
3. maximum total economic surplus; deadweight loss
4. excess total economic surplus; deadweight loss
F) efficiency; efficiency
10. (Points: 1.0)
Suppose that computers are produced using labor and capital. Assume that capital is fixed in the short run and that the computer manufacturers cannot influence the price of labor. An improvement in the technology of producing computers will
1. increase the marginal product of labor which will cause the short-run marginal cost to decrease, and the short-run supply curve to shift left
2. increase the marginal product of labor which will cause the short-run marginal cost to increase, and the short-run supply curve to shift right
3. decrease the marginal product of labor which will cause the short-run marginal cost to increase, and the short-run supply curve to shift right
4. increase the marginal product of labor which will cause the short-run marginal cost to decrease, and the short-run supply curve to shift to the right
5. decrease the marginal product of labor which will cause the short-run marginal cost to decrease, and the short-run supply curve to shift right
13. (Points: 1.0)
Chris was the business manager for a real estate firm earning an annual salary of $40,000. Then Chris decided to open a consulting business. Chris hired an administrative assistant at $15,000 per year and rents office space (utilities included) for $3,000 per month. Chris earned $100,000 in total revenue the first year.
Chris's economic profit is _______.
1. $9,000
2. $100,000
3. $49,000
4. $60,000
5. $64,000
Explanation / Answer
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.
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.
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
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.
6. (Points: 1.0)
Which ordering best describes how a perfectly competitive industry (characterized by constant cost) would respond to a sudden increase in popularity of the product? The market demand curve will shift to the right causing the market
1. price to increase, and all firms in the industry will earn higher profits at lower quantities of output.
2. price to increase. Increased profits will encourage new firms to enter the market. The market supply curve will shift to the right. When the market returns to its long-run equilibrium, quantity will be higher, but price will be the same as before the surge.
3. price to increase, and a new long-run equilibrium to be established at a higher price and a higher quantity.
4. price and quantity to increase. The market supply curve will shift to the left and the new long-run market equilibrium will be at a a higher price, but at the same quantity as before the surge.
5. price and quantity to increase. Increased profits will encourage new firms to enter the industry. The market supply curve shifts to the right. The new long-run market equilibrium will be at a higher quantity and higher price than before the surge in popularity.
9. (Points: 1.0)
Private incentives in markets with external benefits lead to ………… while private incentives in markets with external costs lead to ………..
1. deadweight loss; deadweight loss
2. excess total economic surplus; efficiency
3. maximum total economic surplus; deadweight loss
4. excess total economic surplus; deadweight loss
F) efficiency; efficiency
10. (Points: 1.0)
Suppose that computers are produced using labor and capital. Assume that capital is fixed in the short run and that the computer manufacturers cannot influence the price of labor. An improvement in the technology of producing computers will
1. increase the marginal product of labor which will cause the short-run marginal cost to decrease, and the short-run supply curve to shift left
2. increase the marginal product of labor which will cause the short-run marginal cost to increase, and the short-run supply curve to shift right
3. decrease the marginal product of labor which will cause the short-run marginal cost to increase, and the short-run supply curve to shift right
4. increase the marginal product of labor which will cause the short-run marginal cost to decrease, and the short-run supply curve to shift to the right
5. decrease the marginal product of labor which will cause the short-run marginal cost to decrease, and the short-run supply curve to shift right
13. (Points: 1.0)
Chris was the business manager for a real estate firm earning an annual salary of $40,000. Then Chris decided to open a consulting business. Chris hired an administrative assistant at $15,000 per year and rents office space (utilities included) for $3,000 per month. Chris earned $100,000 in total revenue the first year.
Chris's economic profit is _______.
1. $9,000
2. $100,000
3. $49,000
4. $60,000
5. $64,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.