ECON 110 Quiz 3 Supply Decisions Competition solutions complete answers

ECON 110 Quiz 3 Supply Decisions Competition solutions complete answers 

 

Which of the following is a possible way to increase productivity?

 

If productivity increases, the marginal cost curve will shift upward.

 

In monopolistic competition, firms do not have the ability to alter market price.

 

Flour would be considered which of the following factors of production?

 

If the number of catfish farms in Arkansas fell over the course of 5 years, this would suggest that

 

Because of the ease of entry into the market of monopoly, profits are competed away by the new firms.

 

A perfectly competitive firm

 

When a firm makes an investment decision, it views all inputs as

 

Perfect competition has a ______ number of relatively ______ firms.

 

The general shape of the average total cost curve is

 

Which of the following is NOT a factor of production?

 

Investment decisions are long-run decisions.

 

Which of the following is least likely to be an example of monopolistic competition?

 

If more of an input factor is used, while holding other inputs constant, a firm will eventually experience

 

If perfectly competitive firms earn economic profit in the short run, then we would expect that in the long run

 

A production function shows the maximum amount of a particular good or service that can be produced with different combinations of resources.

 

In the short run, when output is zero, total costs are zero.

 

Marginal cost is 

 

Economic costs include only the explicit payments made for a factor of production.

 

A rightward shift in market supply curve could be caused by

 

When some firms are forced out of a market due to economic losses, the result is a better use of our scarce resources.

 

The change in total output that results from one additional unit of input is the

 

The production decision is the

 

Choosing the rate of output with existing plant and equipment is known as the production decision.

 

When more resources are added, the additional output that these resources produce decreases. This is called the

 

Which of the following is consistent with a perfectly or monopolistically competitive market?

 

It is impossible to:

 

An individual competitive firm

 

Which of the following is equivalent to total cost?

 

Which of the following is most true about the short run?

 

The position of the firm's supply curve depends on

 

For a firm operating in a perfectly competitive industry

 

The number and relative size of firms in an industry defines the type of

 

Land, labor, capital, and entrepreneurship are called

 

In defining costs, economists recognize

 

You have just begun a lawn care business and have purchased one electric lawn mower, one trimmer, and one rake. You have hired two employees to help with the work. Why might you begin experiencing diminishing returns as you hire additional workers?

 

The factors of production include:

 

Which of the following is a factor of production for Cathy's Cookies?

 

Which of the following are factors of production for Terry's Taco Patio?

 

Land, labor, capital and entrepreneurship are called:

 

Which of the following are factors of production for a typical college?

 

The maximum output that can be produced from a set of inputs is measured by:

 

Which of the following statements concerning the relationship between total product (TP) and marginal physical product (MPP) is not correct?

 

The limits to the production of any good are reflected in the:

 

When a firm produces a level of output on the production function:

 

If the first, second, third and forth worker employed by the firm add 15, 21, 12 and 8 units of total product respectively, we can conclude that:

 

The law of diminishing returns means that:

 

The change in total output that results from one additional unit of input is the:

 

Marginal physical product is:

 

The law of diminishing returns can explain why:

 

Ceteris paribus, the law of diminishing returns states that beyond some point the:

 

If more of an input factor is used, while holding other inputs constant, a firm will eventually experience:

 

As more labor is hired in the short run, diminishing returns are observed because:

 

The law of diminishing returns indicates that the marginal physical product of a factor declines as more:

 

Assume a toy company hires an additional worker to assemble toys, and the size of the factory and amount of equipment remain constant. As a result, the level of output increases but by a smaller amount than when the previous additional worker was hired. This is an example of:

 

Assume a restaurant hires an additional chef who is as qualified as the current chefs. As a result, the level of output increases but by a smaller amount than when the previous additional chef was hired. Which of the following best explains this occurrence?

 

Which of the following is the best explanation of why the law of diminishing returns does not apply in the long run?

 

Total revenue minus total cost equals:

 

Profit is the difference between:

 

A firm can be identified as profitable if the:

 

The most desirable rate of output is the one that:

 

The market value of all resources used in producing a good or service is expressed by:

 

Which of the following is equivalent to total cost?

 

The sum of fixed cost and variable cost at any rate of output is equal to:

 

Which of the following will always increase as output increases?

 

Costs of production that do not change with the rate of output are:

 

Which of the following is most likely a fixed cost?

 

Total cost is equal to _____ costs at an output level of zero.

 

It is impossible to:

 

Costs of production that change with the rate of output are:

 

When producing jeans, which of the following is not a variable cost in the short run?

 

Which of the following is most likely a variable cost in the short run?

 

If a firm increases output, total costs will rise because of a change in:

 

Average total cost is defined as:

 

Which of the following is equivalent to average total cost?

 

The average total cost curve is:

 

The reason the average total cost curve declines initially is because of:

 

Marginal cost is equal to:

 

Marginal cost will increase with greater output if:

 

If an additional unit of labor costs $30 and has an MPP of 50 units of output, the marginal cost is:

 

If an additional unit of labor costs $40 and has an MPP of 50 units of output, the marginal cost is:

 

If an additional unit of labor costs $25 and has an MPP of 40 units of output, the marginal cost is:

 

Marginal cost:

 

Rising marginal costs result from:

 

Rising marginal costs are the result of:

 

The selection of the short-run rate of output is the:

 

The short-run supply decision focuses on:

 

In the short run, a manufacturer should produce the next unit of output as long as:

 

If price is greater than marginal cost for the last unit produced:

 

If price is greater than marginal cost but not average total cost, then:

 

In the long run, a company will stay in business as long as price is:

 

When a firm makes an investment decision, it views all inputs as:

 

The decision to build, buy, or lease a plant is known as the:

 

Which of the following must be considered in long run planning?

 

Which of the following is not a long-run investment decision?

 

The main difference to an economist between "short-run" and "long-run" is that:

 

The planning period over which at least one resource input is fixed in quantity is the:

 

Which of the following is true about the short run?

 

During the short run:

 

The long run refers to:

 

During the long run:

 

Explicit costs:

 

Economic cost is:

 

In defining costs, economists recognize:

 

Economic and accounting costs will differ:

 

Economic costs are greater than accounting costs:

 

The best measure of the economic cost of doing your homework is:

 

Which of the following definitions is correct?

 

Economic profit is equal to total revenue minus:

 

Suppose a firm incurred explicit costs of $900 and implicit costs of $200 during a day. If that day the firm sold 8 units at $300 per unit its accounting profits are:

 

What are the daily accounting costs for the firm described above?

 

What are the daily explicit costs for the firm described above?

 

What are the daily implicit costs for the firm described above?

 

Based on the law of diminishing returns, if the number of workers increases and capital investments do not keep pace then, ceteris paribus:

 

A firm's rising factor costs can be offset by:

 

Which of the following government policies is least likely to increase productivity?

 

If government policies to increase productivity are successful, then the:

 

Advances in managerial knowledge shift the production function:

 

Improvements in technology shift the:

 

Which of the following would cause a firm's production function to shift upward?

 

An investment in human and nonhuman capital will result in:

 

What is the marginal physical product of the first unit of labor in Table 5.1?

 

What is the marginal physical product of the second unit of labor in Table 5.1?

 

What is the marginal physical product of the fourth unit of labor in Table 5.1?

 

With which unit of labor do diminishing marginal returns first appear in Table 5.1?

 

What is the marginal cost of the 15th pair of jeans in Table 5.2?

 

What is the marginal cost of the 30th pair of jeans in Table 5.2?

 

What is the marginal cost of the 40th pair of jeans in Table 5.2?

 

If the firm in Table 5.2 receives $7.00 for each pair of jeans, in the short run it should:

 

If the firm in Table 5.2 can sell jeans for $7.00 per pair, the total profit from producing 30 pair is:

 

If the firm in Table 5.2 can sell jeans for $7.00 per pair, the total profit from producing 40 pair is:

 

The production rate in Table 5.3 at which the lowest possible average total cost for yearbooks is achieved would be:

 

In Table 5.3, marginal cost per yearbook, between 100 and 200 yearbooks is equal to:

 

The marginal cost is at a minimum in Table 5.3 when:

 

In Table 5.4, fixed costs:

 

In Table 5.4, variable cost,

 

In Table 5.4, the marginal cost is at a minimum when:

 

In Table 5.4, the lowest average total cost occurs at a production rate of:

 

In Table 5.5, the marginal cost of the first unit of output is:

 

In Table 5.5, the total cost of 2 units is:

 

In Table 5.5, the total cost of 3 units is:

 

In Table 5.5, the total variable cost of the first unit is:

 

In Table 5.6, total fixed costs are equal to:

 

In Table 5.6, the marginal cost of the third unit of output is:

 

In Table 5.6, the total cost of 2 units of output is:

 

In Table 5.6, the total cost of 3 units of output is:

 

In Table 5.6, the total variable cost of 2 units of output is:

 

In Table 5.6, the total variable cost of 1 unit of output is:

 

In Table 5.6, the average variable cost of 3 units of output is:

 

In Figure 5.1, the marginal physical product of the third unit of labor is:

 

In Figure 5.1, the marginal physical product of the fourth unit of labor is:

 

In Figure 5.1, diminishing marginal returns first occur with the:

 

In Figure 5.2, what is the marginal cost of the 12th unit of output?

 

In Figure 5.2, what is the total fixed cost?

 

In Figure 5.2, what is the total cost of 10 units?

 

In Figure 5.2, what is the total variable cost when output is 10 units?

 

In Figure 5.2, what is the total variable cost when output is 12 units?

 

The production function indicates how much output producers will actually produce.

 

A production function shows the maximum amount of a particular good or service that can be produced with different combinations of resources.

 

Actual output will always equal the limit described by the production function.

 

Marginal physical product is the change in total output associated with an additional unit of input.

 

Total output may continue to rise even though marginal physical product is decreasing.

 

If the marginal physical product of an input is decreasing, output will also be decreasing.

 

According to the law of diminishing returns, the marginal physical product of a variable input declines as more of it is employed with a given quantity of other inputs.

 

The short run implies that all factor inputs are fixed.

 

In the long run, all costs are variable.

 

Profit is equal to total revenue minus total cost.

 

Fixed costs are the same as total costs at a production rate of zero units in the short run.

 

Fixed costs can be avoided in the short run.

 

In the short run, when output is zero, total costs are zero.

 

Marginal cost is equal to the change in variable costs divided by the change in output.

 

In the short run, if marginal cost is less than price for the last unit produced, the firm should expand output.

 

How intensively to use existing plant and equipment is a long-run investment decision.

 

Long-run choices imply that all factors are variable.

 

Investment decisions are long-run decisions.

 

Economic costs are the value of all resources used to produce a good or service.

 

Economic and accounting costs differ by the amount of explicit costs.

 

Economic costs include only the explicit payments made for a factor of production.

 

When implicit costs exist, economic profit will be less than accounting profit.

 

School subsidies and capital investment tax incentives are examples of government policy designed to increase productivity.

 

A firm's production function will shift downward if worker productivity increases.

 

When the marginal physical product curve shifts upward because of technological advances, the marginal cost curve shifts downward.

 

The number and relative size of firms in an industry is the definition of:

 

Market structure is determined by:

 

An individual competitive firm:

 

Competitive firms cannot individually affect market price because:

 

A perfectly competitive firm:

 

In a perfectly competitive market:

 

Which of the following is an example of perfect competition?

 

Which of the following is true concerning a monopoly?

 

Which of the following is an example of a monopoly?

 

Market power:

 

If a firm can change market prices by altering its output then it:

 

Which list has market structures in the correct order from the most to the least market power?

 

An industry in which two firms supply a particular product is:

 

If Pepsi and Coke are the only two soft drink producers, they could be considered:

 

An industry in which a few large firms supply most or all of a product is known as:

 

If there are only four companies that produce tennis balls, the market could be considered:

 

Which of the following is an example of monopolistic competition?

 

Which of the following is not an example of monopolistic competition?

 

An industry in which many firms produce similar products but each firm has significant brand loyalty is known as:

 

Which of the following is not characteristic of a perfectly competitive market?

 

Which of the following is characteristic of perfectly competitive markets?

 

Which of the following is characteristic of a perfectly competitive market?

 

A perfectly competitive firm is a price taker because:

 

In which of the following industries is the firm referred to as a price taker?

 

An individual wheat farmer has no market power because:

 

Which of the following is the best example of a perfectly competitive market?

 

Which of the following is the best example of a perfectly competitive market?

 

Suppose a perfectly competitive firm increases its output. In order to sell this additional output, the firm:

 

A perfectly competitive firm currently sells 30,000 cartons of eggs at $1.25 each. If the firm wants to sell one more carton of eggs, the firm:

 

If an individual perfectly competitive firm raises its price above the market price, it will:

 

A flat or horizontal demand curve for a firm indicates that:

 

In the perfectly competitive catfish market, the market demand curve is:

 

Which of the following characterizes a perfectly competitive market?

 

The equilibrium price for a perfectly competitive firm always occurs:

 

A catfish farmer, in a perfectly competitive market:

 

The production decision is the:

 

Which of the following is involved in a competitive firm's short-run production decision?

 

In making a production decision, a business owner:

 

The price of a good multiplied by the quantity sold equals:

 

Total revenue is equal to the:

 

If a perfectly competitive firm produces and sells more output, its _______ will definitely increase.

 

Total profit is equal to:

 

The goal of most business firms is to:

 

Economists assume that the principal motivation of producers is:

 

If a perfectly competitive firm wanted to maximize its total revenues, it would produce:

 

A producer tries to maximize profits by operating at an output where:

 

If price equals ATC and equals MC then:

 

Marginal cost is:

 

Marginal costs:

 

If the market price was below the ATC and at the current firm's rate of production the MC was less than the market price an increase in output would:

 

The law of diminishing returns helps to explain why:

 

If marginal cost equals price, then _____ is at a maximum.

 

A profit-maximizing competitive firm wants to _____ the rate of output when price _____ marginal cost.

 

If price is greater than marginal cost, a competitive firm should increase output because additional units of output will:

 

A profit-maximizing competitive firm wants to _____ the rate of output when marginal cost _____ price.

 

A profit-maximizing producer wants to produce where:

 

Profit per unit equals:

 

The ability and willingness to sell specific quantities of a good at alternative prices in a given period of time, ceteris paribus, defines:

 

A rightward shift in market supply curve could be caused by:

 

For a competitive firm, the marginal cost curve:

 

Which of the following is not true for a competitive firm?

 

If the level of productivity increases, then:

 

Ceteris paribus, if the cost of paper increases for book publishers, in order to maximize profits, book publishers should:

 

Ceteris paribus, if the cost of insecticide decreases for tomato farmers, in order to maximize profits tomato farmers should:

 

If the cost of production rises for all the firms in a perfectly competitive industry:

 

Which of the following is a determinant of market supply but will not influence the marginal cost curve of an individual firm?

 

The segment of the firm's marginal cost curve that:

 

The market supply curve is calculated by:

 

The location of the firm's product supply curve depends on:

 

Market supply in a competitive market is determined by:

 

Equilibrium price refers to the:

 

In a competitive market, in the long run, economic profits will cause:

 

In a perfectly competitive industry, firms are likely to:

 

In a perfectly competitive market with positive economic profits:

 

In a competitive market with economic profits, equilibrium:

 

When a new firm enters a market, it:

 

In a competitive market where firms are earning economic profits, which of the following is likely as the industry moves toward long-run equilibrium?

 

In long-run competitive equilibrium:

 

Economic profits disappear when:

 

Which of the following is consistent with competitive long-run equilibrium?

 

Assume that for an individual firm MC = AVC at $6 and MC = ATC at $10 and MC = price at $12 then the firm will be operating:

 

In long-run competitive market equilibrium, price equals _______ and economic profit is ______.

 

In the long run, a perfectly competitive market with economic losses will experience:

 

When firms exit an industry, price _______ and industry output ______.

 

When firms exit a market, all of the following occurs except:

 

Obstacles that make it difficult or impossible for additional producers to begin producing or selling in a new market are referred to as:

 

Which of the following is considered a barrier to entry?

 

Which of the following is not considered a barrier to entry?

 

Which of the following is not considered a barrier to entry?

 

Which of the following market structures has the fewest barriers to entry?

 

Which of the following market structures has the highest barriers to entry?

 

Which of the following is consistent with a competitive market?

 

Which of the following does not characterize a competitive market?

 

Which of the following does not characterize a competitive market?

 

Which of the following does not characterize a competitive market?

 

In a competitive market, maximum efficiency is achieved because of:

 

Competition in markets results in:

 

In a competitive market, economic losses indicate that:

 

Refer to Figure 6.1 for a perfectly competitive firm. If the market price is $30:

 

Refer to Figure 6.1 for a perfectly competitive firm. If the market price is $20:

 

Refer to Figure 6.1 for a perfectly competitive firm. If the market price is $46:

 

Refer to Figure 6.1 for a perfectly competitive firm. This firm earns zero economic profit at a price of:

 

Refer to Figure 6.2 for a perfectly competitive firm. If price is $4, the profit-maximizing rate of output is:

 

Refer to Figure 6.2 for a perfectly competitive firm. If price is $8, the firm is:

 

Refer to Figure 6.2 for a perfectly competitive firm. If price is $6, the firm is:

 

Refer to Figure 6.2 for a perfectly competitive firm. If price is $4, the firm is:

 

Refer to Figure 6.2 for a perfectly competitive firm. If price is $10, the firm is:

 

Which of the following characteristics of the catfish market can be verified from this passage?

 

Which of the following outcomes of the competitive market process can be verified from this passage?

 

From the passage, the expected economic profit from the catfish market:

 

Based on the passage, what should happen to the equilibrium price and quantity of catfish over time?

 

The HEADLINE article in the text titled "Flat Panels, Thin Margins" says that the prices for flat-panel TVs are falling. Which of the following is a likely reason why prices are decreasing?

 

The HEADLINE article in the text is titled "T-Shirt Shop Owner's Lament: Too Many T-Shirt Shops." If T-shirt shops are perfectly competitive firms, then:

 

Market structure is determined by the number and relative size of the firms in the industry.

 

Market structure is determined by the asset size of the industry.

 

A perfectly competitive firm has some competitors but it is still able to influence the market price.

 

A monopoly is a single firm that produces the entire market supply of a particular good or service.

 

In monopolistic competition, firms charge the same price as other firms in the market since they produce identical products.

 

In monopolistic competition, firms do not have the ability to alter market price.

 

In perfect competition, price is determined by the market and individual firms have no control over price.

 

In perfect competition, individual firms have some control over market price.

 

In a perfectly competitive industry, each producer contributes a very small percentage of total market output.

 

If a perfectly competitive firm raises its price above the market price, it will lose all its customers.

 

In perfect competition, the market demand curve for a product is flat or horizontal.

 

In perfect competition, the demand curve for an individual firm is flat or horizontal.

 

Choosing the rate of output with existing plant and equipment is known as the production decision.

 

The production decision is a choice about long-run supply.

 

Total profit is the difference between total revenue and total cost.

 

Marginal cost is the change in total costs because of a one-unit increase in output.

 

As long as price is greater than marginal cost, an increase in the rate of output will decrease profit.

 

If price is less than marginal cost, increases in the rate of output will increase profit.

 

Short-run profits are maximized if the firm produces where marginal cost equals price.

 

Competitive firms will adjust the quantity supplied until marginal cost equals price.

 

The marginal cost curve is the short-run supply curve for a competitive firm.

 

If productivity increases, the marginal cost curve will shift upward.

 

For a perfectly competitive industry, as long as an economic profit is attainable, new firms will enter the market.

 

In a perfectly competitive industry, if the buyers expect the price to rise in the future economic profits will increase.

 

Competitive firms can earn an economic profit in the long run.

 

In a competitive market, firms are price takers and will earn zero economic profit in the long run.

 

In a competitive market if a firm is operating at a point where MC is greater than price it will attempt to cut back production.

 

When economic profits exist in a perfectly competitive market, the number of suppliers will increase and the market price will fall in the long run.

 

When economic losses exist in a perfectly competitive market, the number of suppliers will increase and the market price will fall.

 

There are high barriers to entry in a perfectly competitive market.

 

High profits in a specific industry indicate that consumers are satisfied with the mix of output.

 

When some firms are forced out of a market due to economic losses the result is a better use of our scarce resources.

 

 

The factors of production include:



Which of the following is a factor of production for Cathy's Cookies? 



Which of the following are factors of production for Terry's Taco Patio? 



Land, labor, capital and entrepreneurship are called: 



Which of the following are factors of production for a typical college? 



The maximum output that can be produced from a set of inputs is measured by: 



Which of the following statements concerning the relationship between total product (TP) and marginal physical product (MPP) is not correct?



The limits to the production of any good are reflected in the: A. Law of demand.



When a firm produces a level of output on the production function: 



If the first, second, third and fourth worker employed by the firm add 15, 21, 12 and 8 units of total product respectively, we can conclude that:



The law of diminishing returns means that:



The change in total output that results from one additional unit of input is the: 



Marginal physical product is:



The law of diminishing returns can explain why:



Ceteris paribus, the law of diminishing returns states that beyond some point the: 



If more of an input factor is used, while holding other inputs constant, a firm will eventually experience:



As more labor is hired in the short run, diminishing returns are observed because: 



The law of diminishing returns indicates that the marginal physical product of a factor declines as more:



Assume a toy company hires an additional worker to assemble toys, and the size of the factory and amount of equipment remain constant. As a result, the level of output increases but by a smaller amount than when the previous additional worker was hired. This is an example of: 



Assume a restaurant hires an additional chef who is as qualified as the current chefs. As a result, the level of output increases but by a smaller amount than when the previous additional chef was hired. Which of the following best explains this occurrence?



Which of the following is the best explanation of why the law of diminishing returns does not apply in the long run?



Total revenue minus total cost equals: 



Profit is the difference between: 



A firm can be identified as profitable if the:



The most desirable rate of output is the one that: 



The market value of all resources used in producing a good or service is expressed by: 



Which of the following is equivalent to total cost? 



The sum of fixed cost and variable cost at any rate of output is equal to: 



Which of the following will always increase as output increases? 

 

Costs of production that do not change with the rate of output are: 



Which of the following is most likely a fixed cost? 



Total cost is equal to _____ costs at an output level of zero.



It is impossible to:



Costs of production that change with the rate of output are: 

 

When producing jeans, which of the following are not a variable cost in the short run? 



Which of the following is most likely a variable cost in the short run? 



If a firm increases output, total costs will rise because of a change in: 



Average total cost is defined as:



Which of the following is equivalent to average total cost?



The average total cost curve is: 



The reason the average total cost curve declines initially is because of: 

 

Marginal cost is equal to:



Marginal cost will increase with greater output if: 



If an additional unit of labor costs $30 and has an MPP of 50 units of output, the marginal cost is:



If an additional unit of labor costs $40 and has an MPP of 50 units of output, the marginal cost is:



If an additional unit of labor costs $25 and has an MPP of 40 units of output, the marginal cost is:



Marginal cost:



Rising marginal costs result from: 



Rising marginal costs are the result of: 



The selection of the short-run rate of output is the:



The short-run supply decision focuses on: 



In the short run, a manufacturer should produce the next unit of output as long as:



If price is greater than marginal cost for the last unit produced: 



If price is greater than marginal cost but not average total cost, then: 



In the long run, a company will stay in business as long as price is:



When a firm makes an investment decision, it views all inputs as: 

 

The decision to build, buy, or lease a plant is known as the: 



Which of the following must be considered in long run planning? 

 

Which of the following is not a long-run investment decision? 



The main difference to an economist between "short-run" and "long-run" is that:
In the long-run all resources are variable where as in the short-run at least one resource is 

 

The planning period over which at least one resource input is fixed in quantity is the: 



Which of the following is true about the short run? 



During the short run:



The long run refers to:



During the long run:



Explicit costs:



Economic cost is:



In defining costs, economists recognize:



Economic and accounting costs will differ:



Economic costs are greater than accounting costs: 



The best measure of the economic cost of doing your homework is: 



Which of the following definitions is correct?



Economic profit is equal to total revenue minus: 

 

Suppose a firm incurred explicit costs of $900 and implicit costs of $200 during a day. If that day the firm sold 8 units at $300 per unit its accounting profits are:



Suppose a firm has the following expenditures per day: $240 for wages, $150 for materials, and $80 for equipment rental. The owner of the firm owns the building in which it operates. If the firm were not operating in the building, he could rent the building for $70 per day. Total daily revenue is $600.
What are the daily accounting costs for the firm described above?



What are the daily explicit costs for the firm described above?



What are the daily implicit costs for the firm described above?



Based on the law of diminishing returns, if the number of workers increases and capital investments do not keep pace then, ceteris paribus:



A firm's rising factor costs can be offset by: 



Which of the following government policies is least likely to increase productivity? 



If government policies to increase productivity are successful, then the: 



Advances in managerial knowledge shift the production function: 

 

Improvements in technology shift the: 



Which of the following would cause a firm's production function to shift upward? 



An investment in human and nonhuman capital will result in: 

 

The production function indicates how much output producers will actually produce.

 

A production function shows the maximum amount of a particular good or service that can be produced with different combinations of resources.

 

Actual output will always equal the limit described by the production function.

 

Marginal physical product is the change in total output associated with an additional unit of input.

 

Total output may continue to rise even though marginal physical product is decreasing.

 

If the marginal physical product of an input is decreasing, output will also be decreasing.

 

According to the law of diminishing returns, the marginal physical product of a variable input declines as more of it is employed with a given quantity of other inputs.

 

The short run implies that all factor inputs are fixed.

 

In the long run, all costs are variable.

 

Profit is equal to total revenue minus total cost.

 

Fixed costs are the same as total costs at a production rate of zero units in the short run.

 

Fixed costs can be avoided in the short run.

 

In the short run, when output is zero, total costs are zero.

 

Marginal cost is equal to the change in variable costs divided by the change in output.

 

In the short run, if marginal cost is less than price for the last unit produced, the firm should expand output.

 

How intensively to use existing plant and equipment is a long-run investment decision.

 

Long-run choices imply that all factors are variable.

 

Investment decisions are long-run decisions.

 

Economic costs are the value of all resources used to produce a good or service.

 

Economic and accounting costs differ by the amount of explicit costs.

 

Economic costs include only the explicit payments made for a factor of production.

 

When implicit costs exist, economic profit will be less than accounting profit.

 

School subsidies and capital investment tax incentives are examples of government policy designed to increase productivity.

 

A firm's production function will shift downward if worker productivity increases.

 

When the marginal physical product curve shifts upward because of technological advances, the marginal cost curve shifts downward.

 

The question of how much can be produced is mostly a(n): 



As more output is produced, a firms production cost rises. This will affect the firm's _______decisions.



Economic profit equals:



A production function describes:



Which of the following is a possible way to increase productivity? 

 

The selection of output in the short-run is referred to as: 



You are cramming for a key economics exam, and your only concern is to earn the maximum possible grade, regardless of the cost. Accordingly, you should continue to study:



Average costs are:



When more resources are added, the additional output that these resources produce decreases. This is called the:



As output increases, fixed costs: 



An average total cost curve (ATC) is U-shaped because ATCs



Which of these statements about variable costs is incorrect? 



You have just begun a lawn care business and have purchased one electric lawn mower, one trimmer, and one rake. You have hired two employees to help with the work. Why might you begin experiencing diminishing returns as you hire additional workers?



Which of the following terms represents the cost of an additional unit of output? A. Total cost.



The investment decision involves:



Which of the following is not a factor of production? A. Your economics professor.



Last year, Dr. Lopez quit his $100,000 job at the MegaMall Dental Clinic and opened his own dental practice. His revenue for the first year was $400,000. He paid $80,000 in rent for the dental office, $60,000 for his office manager's salary, $25,000 for the dental hygienist, $150,000 for insurance, and $10,000 for other miscellaneous expenses. Based on this information, which of these statements is correct?



Refer to Figure 6.2 for a perfectly competitive firm. If price is $10, the firm is:

 

Because of the ease of entry into the market of monopoly, profits are competed away by the new firms.



When some firms are forced out of a market due to economic losses the result is a better use of our scarce resources.



When a new firm enters a market, it:

 

Total profit is the difference between total revenue and total cost.



If the number of catfish farms in Arkansas fell over the course of 5 years, this would suggest that

 

In a perfectly competitive market:

 

The location of the firm's product supply curve depends on:

 

For a firm operating in a perfectly competitive industry:

 

Profit per unit equals:

 

Which of these market structures is correctly matched with its example?

 

For a competitive firm, the marginal cost curve:

 

Refer to Figure 6.1 for a perfectly competitive firm. If the market price is $30:

 

If a perfectly competitive firm wanted to maximize its total revenues, it would produce:

 

An individual wheat farmer has no market power because:

 

A perfectly competitive firm currently sells 30,000 cartons of eggs at $1.25 each. If the firm wants to sell one more carton of eggs, the firm:

 

Ceteris paribus, if the cost of insecticide decreases for tomato farmers, in order to maximize profits tomato farmers should:

 

An industry in which many firms produce similar products but each firm has significant brand loyalty is known as:

 

If the market price is less than MC, then the perfectly competitive firm should increase production.



The number and relative size of firms in an industry defines the type of

 

An individual competitive firm

 

In a perfectly competitive market

 

Which of the following is an example of perfect competition?

 

Market power

 

Which list has market structures in the correct order from the most to the least market power?

 

If Pepsi and Coca-Cola are the only two soft drink producers, they could be considered

 

An industry in which a few large firms supply most or all of a product is known as

 

Which of the following is an example of monopolistic competition?

 

Which of the following is characteristic of a perfectly competitive market?

 

Which of the following would be considered a short-run production decision for a competitive firm?

 

The goal of most business firms is to

 

A perfectly competitive producer tries to maximize profits by operating at an output where

 

If price equals average total cost AND marginal cost then

 

Marginal cost is

 

The law of diminishing returns helps to explain why

 

A rightward shift in market supply curve could be caused by

 

Which of the following is NOT true for a competitive firm?

 

The market supply curve is calculated by

 

In a competitive market with economic profits, equilibrium

 

When a new firm enters a perfectly competitive market, it

 

Over the long run, a perfectly competitive market equilibrium

 

Economic profits disappear when

 

Assume that for an individual firm marginal cost equals average variable cost at $6. Furthermore, marginal cost equals average total cost at $10. If the current price is $12, then the firm will operate

 

Over the long run, a perfectly competitive market equilibrium, price equals the _______ and economic profit is _______.

 

When firms exit an industry, price _______ and industry output _______.

 

When firms exit a market, all of the following occurs except

 

Which of the following is consistent with a perfectly or monopolistically competitive market?

 

Which of the following does NOT characterize a perfectly competitive market?

 

A competitive firm:

 

Competitive firms:

 

The fact that competitive firms are price takers means:

 

In a competitive industry:

 

A firm operating in a perfectly competitive industry:

 

For a firm operating in a perfectly competitive industry:

 

For firms operating in perfectly competitive industries:

 

In long-run competitive equilibrium:

 

If firms in a competitive industry were earning short-run economic profits:

 

If firms in a competitive industry are experiencing losses, then:

 

A duopoly exists when there is/are ______ firm(s) in a particular market.

 

A competitive firm has ______ power over the price of the good it produces.

 

Perfect competition has a ______ number of relatively ______ firms.

 

The demand curve facing a perfectly competitive firm is:

 

In perfect competition profits are maximized at the output level where P ___ MC.

 

Total profit is equal to total revenue ______ total cost.

 

Which of the following are the most important influences on marginal cost (and supply behavior)?

 

If economic profits are occurring, firms will ______ the industry and the price of the good will ______.

 

In long-run competitive market equilibrium, price ______ minimum average total cost.

 

Competitive markets have ______ barriers to entry.

 

Which of the following represent the two extremes of market structure?

 

Total profit can be calculated using the following formula: (Price - ___) x ___.

 

In a perfectly competitive firm, marginal revenue is:

 

The MC curve is a competitive firm's short-run _____ curve.

 

The profit maximizing rule is to produce the output level where _____ equals _____.

 

On a graph, the profitable range of output occurs when total revenue _____ total cost.

 

Which of the following is characteristic of a perfectly competitive market?

 

Which of the following is characteristic of perfectly competitive markets?

 

Which list has market structures in the correct order from the most to the least market power?

 

An industry in which a few large firms supply most or all of a product is known as

 

Which of the following is NOT characteristic of a perfectly competitive market?

 

In which of the following industries is the firm referred to as a price taker?

 

Which of the following is the best example of a perfectly competitive market?

 

A perfectly competitive firm is a price taker because

 

Which of the following market structures has the highest barriers to entry?

 

Which of the following market structures has the lowest barriers to entry?

 

Which of the following is an example of perfect competition?

 

Which of the following is an example of monopolistic competition?

Many firms supply similar products, each with some consumers who show significant brand 

 

Which of the following is least likely to be an example of monopolistic competition?

 

If there are only four companies that produce tennis balls, the market could be considered

 

Competitive firms cannot individually affect market price because

 

Which of the following is true concerning a monopoly?

 

An industry in which many firms produce similar products, but each firm has significant brand loyalty, is known as

 

In a perfectly competitive market

 

Which of the following is an example of a monopoly?

 

The number and relative size of firms in an industry defines the type of

 

Which of the following is an example of monopolistic competition?

 

Which of the following is NOT characteristic of a perfectly competitive market?

 

In which of the following industries is the firm referred to as a price taker?

 

Which of the following is the best example of a perfectly competitive market?

 

A perfectly competitive firm currently sells 30,000 cartons of eggs at $1.25 each. If the firm wants to sell one more carton of eggs, the firm

 

In the perfectly competitive catfish market, the market demand curve is

 

If a perfectly competitive firm produces and sells more output, its _______ will definitely increase.

 

A perfectly competitive producer tries to maximize profits by operating at an output where

 

If price equals average total cost AND marginal cost then

 

The law of diminishing returns helps to explain why

 

If marginal cost equals price, then _____ is at a maximum.

 

If price is greater than marginal cost, a competitive firm should increase output because additional units of output will

 

Profit per unit equals

 

The segment of the firm's marginal cost curve that is

 

The market supply curve is calculated by

 

Market supply in a competitive market is determined by

 

If perfectly competitive firms earn economic profit in the short run, then we would expect that in the long run

 

In a perfectly competitive market where firms are earning economic loss, which of the following is likely as the industry moves toward long-run equilibrium?

 

Over the long run, a perfectly competitive market equilibrium

 

Economic profits disappear when

 

In the long run, a perfectly competitive market with economic losses will experience

 

Based on the NEWSWIRE article, "Catfish Farmers Quitting", what should happen to the equilibrium price and quantity of catfish over time?