The document contains solutions to 10 multiple choice questions about perfect competition from an economics textbook. It tests understanding of key characteristics of perfect competition like many small firms, identical products, price-taking behavior. It also tests understanding of how a perfectly competitive firm determines profit-maximizing output using total revenue and total cost curves. Firms will produce at the quantity where price equals marginal cost to maximize profits. The document reinforces these concepts through repeated practice questions.
The document discusses key economic concepts including:
1) Economics is the study of how society allocates scarce resources to meet its unlimited wants. Scarcity means human desires exceed available resources.
2) The fundamental economic problem is scarcity of resources relative to human wants. This means societies must choose how to use limited resources to fulfill goals.
3) The production possibilities curve illustrates scarcity and opportunity costs - increasing one good requires reducing another due to finite resources. It curves outward to show greater sacrifice is needed for additional units of a good.
Test Bank for Microeconomics 20th Edition by McConnellriven03
Test Bank for Microeconomics 20th Edition by McConnell
Download: https://goo.gl/MmRaBa
microeconomics principles problems and policies 21st edition
mcconnell brue flynn economics 20th edition pdf
microeconomics 20th edition by mcconnell brue and flynn mcgraw hill irwin
macroeconomics principles problems and policies 20th edition pdf
This document contains a multiple choice exam on production analysis and compensation policy presented by Suong Jian and Liu Yan from Guangdong University of Finance. It includes 25 multiple choice questions and 4 problems analyzing production functions and input combinations using tables to determine optimal input levels that maximize output or profits. Key concepts covered are production functions, returns to scale, marginal product, average product, isoquants, marginal rates of technical substitution, and determining input levels to achieve economic efficiency.
This document contains 20 multiple choice questions about managerial economics concepts. The questions cover topics such as characteristics of perfect competition, production and costs, market equilibrium, demand and factors that influence demand. For each set of questions, the answers are provided at the end.
This document discusses productivity gaps between the US and Japan at the industry level. It presents methods for calculating purchasing power parity exchange rates for output and inputs for 42 common industries in the two countries. These PPP exchange rates are used to compare levels of labor productivity and total factor productivity between US and Japanese industries from 1960 to 2004. The analysis finds that the US-Japan productivity gap is largely due to lower total factor productivity in Japan, especially in wholesale and retail trade.
This document discusses government policies related to competitive markets. It begins by defining consumer surplus and producer surplus, which are used to evaluate the gains and losses from policies. Price controls are examined as an example, showing the deadweight loss. Other topics covered include the efficiency of competitive markets; minimum prices; price supports and production quotas; import quotas and tariffs; and the impact of taxes and subsidies. Specific examples analyzed include price controls on natural gas and policies related to kidney markets.
The document discusses key economic concepts including:
1) Economics is the study of how society allocates scarce resources to meet its unlimited wants. Scarcity means human desires exceed available resources.
2) The fundamental economic problem is scarcity of resources relative to human wants. This means societies must choose how to use limited resources to fulfill goals.
3) The production possibilities curve illustrates scarcity and opportunity costs - increasing one good requires reducing another due to finite resources. It curves outward to show greater sacrifice is needed for additional units of a good.
Test Bank for Microeconomics 20th Edition by McConnellriven03
Test Bank for Microeconomics 20th Edition by McConnell
Download: https://goo.gl/MmRaBa
microeconomics principles problems and policies 21st edition
mcconnell brue flynn economics 20th edition pdf
microeconomics 20th edition by mcconnell brue and flynn mcgraw hill irwin
macroeconomics principles problems and policies 20th edition pdf
This document contains a multiple choice exam on production analysis and compensation policy presented by Suong Jian and Liu Yan from Guangdong University of Finance. It includes 25 multiple choice questions and 4 problems analyzing production functions and input combinations using tables to determine optimal input levels that maximize output or profits. Key concepts covered are production functions, returns to scale, marginal product, average product, isoquants, marginal rates of technical substitution, and determining input levels to achieve economic efficiency.
This document contains 20 multiple choice questions about managerial economics concepts. The questions cover topics such as characteristics of perfect competition, production and costs, market equilibrium, demand and factors that influence demand. For each set of questions, the answers are provided at the end.
This document discusses productivity gaps between the US and Japan at the industry level. It presents methods for calculating purchasing power parity exchange rates for output and inputs for 42 common industries in the two countries. These PPP exchange rates are used to compare levels of labor productivity and total factor productivity between US and Japanese industries from 1960 to 2004. The analysis finds that the US-Japan productivity gap is largely due to lower total factor productivity in Japan, especially in wholesale and retail trade.
This document discusses government policies related to competitive markets. It begins by defining consumer surplus and producer surplus, which are used to evaluate the gains and losses from policies. Price controls are examined as an example, showing the deadweight loss. Other topics covered include the efficiency of competitive markets; minimum prices; price supports and production quotas; import quotas and tariffs; and the impact of taxes and subsidies. Specific examples analyzed include price controls on natural gas and policies related to kidney markets.
1) The document summarizes key concepts from Chapter 3 of a macroeconomics textbook, including how total national income is determined by aggregate supply and demand.
2) It explains how factor prices like wages and rental rates are determined by supply and demand in factor markets and how this determines the distribution of total income.
3) It outlines the components of aggregate demand - consumption, investment, and government spending - and how their interaction with aggregate supply determines equilibrium in the goods market and the loanable funds market.
The document discusses key concepts in microeconomics including:
1) Utility refers to how consumers rank goods and services based on satisfaction. Marginal utility is the additional satisfaction from consuming one more unit of a good. The law of diminishing marginal utility states that utility grows at a slower rate as more is consumed.
2) Consumers maximize utility when the marginal utility per dollar is equal for all goods purchased. Demand curves slope downward because consumers want less of a good at a higher price. Substitution and income effects explain how consumption changes when a good's price increases.
3) Elasticity measures the responsiveness of quantity to price changes. Demand is more inelastic for addictive drugs than casual drugs.
This document explains the Bertrand model of competition using Coca-Cola and Pepsi as an example. The Bertrand model assumes that firms in an oligopoly compete on price rather than quantity. It describes how Joseph Bertrand improved upon the Cournot model by using price rather than quantity as the strategic variable. The model assumes firms produce differentiated products and set prices to maximize profits, resulting in an equilibrium price equal to marginal cost. However, the model makes unrealistic assumptions and may not accurately describe real-world oligopolistic competition between firms like Coke and Pepsi.
Principles of Microeconomics Midterm 1 "Cheat Sheet"Laurel Ayuyao
Definitions and charts for microeconomics; Topics include: trade, opportunity cost, shifts in supply and demand, consumer and producer surplus, etc. (Made for ECON 10010 at University of Notre Dame)
In the long run, all inputs including capital and labor can be varied as a firm changes its scale of production. As scale increases, a firm may experience economies of scale where average total cost decreases, constant returns to scale where average total cost remains the same, or diseconomies of scale where average total cost increases. The long-run average cost curve depicts the lowest attainable average total cost for a given output level as a firm adjusts its size.
This document presents an analysis of imperfect competition with internal scale economies and homogeneous goods. It discusses the key assumptions of the model, including increasing returns to scale production of homogeneous goods (X) and competitive production of other goods (Y). Under autarky, the X industry exhibits imperfect competition due to internal scale economies. Equilibrium occurs where price exceeds average cost for firms in industry X, but is below marginal cost, resulting in underproduction. The document then analyzes how trade can generate pro-competitive gains under two scenarios: 1) with a fixed number of firms and 2) with free entry and exit of firms. It finds trade can increase production, lower prices and average costs in industry X by enhancing competition in both scenarios.
Profit maximization and perfect competitionjaveria gul
1) A firm produces at the quantity where marginal revenue equals marginal cost to maximize profits. This is the point where additional revenue from producing another unit equals the additional costs.
2) A firm's profit is maximized by producing at the output level where marginal revenue equals marginal cost. Producing more would mean marginal costs exceed marginal revenues, reducing profits.
3) In the short run, a competitive firm will produce the quantity where marginal revenue equals marginal cost to maximize profits. The firm's profit is represented by the rectangle between average total cost and marginal cost at the profit-maximizing quantity.
Principles of Economics TestBank Chapter曼昆《经济学原理》(微观)第五版测试题库 (20)Molly Ray
This document contains a chapter on income inequality and poverty that includes:
- True/false questions about concepts like the poverty line, income inequality in different countries, and government programs.
- Short answer questions defining key terms and comparing theories like the life cycle hypothesis and permanent income hypothesis.
- Descriptions of philosophical views on redistribution including utilitarianism, liberalism, and libertarianism.
The document discusses the principle of least cost combinations for a firm using two factors of production, labor and capital. It states that a rational firm will combine inputs in a way that minimizes costs while maximizing output. This optimal combination occurs where the marginal productivity per unit of each input divided by its price is equal between the two inputs. Isoquants and isocost lines are introduced to illustrate the combinations that achieve least cost.
1) El documento discute diferentes tipos de mercados como mercados perfectamente competitivos, monopolios puros y oligopolios.
2) Explica las características de un mercado perfectamente competitivo como numerosos compradores y vendedores, entrada y salida libre, conocimiento perfecto, bienes homogéneos, costos y beneficios externos.
3) También define monopolio puro, oligopolio y competencia como conceptos clave relacionados con los mercados.
DSM-5: Trauma and Stress Related Disorders, Dissociative Disorders, Feeding/E...Christine Chasek
This document provides an overview of Trauma- and Stressor-Related Disorders as categorized in the DSM-5. It describes the new category and disorders included, such as Posttraumatic Stress Disorder, Acute Stress Disorder, and Adjustment Disorders. Criteria for specific disorders are outlined and treatment options discussed, including various forms of psychotherapy and medications.
MCQs of Elasticity of Demand and SupplyEjaz Dilshad
This document contains 35 multiple choice questions related to concepts in microeconomics including:
- Price elasticity of demand and supply
- Determinants and shifts of demand and supply curves
- Effects of price floors, price ceilings, and taxes
- Characteristics and definitions of normal goods, inferior goods, substitutes and complements
- Measurement and interpretation of elasticity coefficients
This document discusses demand, supply, and market equilibrium. It defines demand as the quantity of a good consumers are willing to purchase at different prices. Supply is defined as the quantity producers are willing to provide at different prices. The law of demand and supply state that demand is negatively related to price and supply is positively related to price. Market equilibrium occurs where quantity demanded equals quantity supplied at the market clearing price. The document provides examples of how equilibrium price and quantity change when demand or supply shifts.
Perfect competition is a market structure with many small firms, homogeneous products, perfect information and free entry and exit. In the short run, firms maximize profits where marginal cost (MC) equals marginal revenue (MR). Abnormal profits attract new firms, lowering prices to normal profits when MC equals average cost (AC). Allocative efficiency occurs where MC equals average revenue (AR). In the long run, productive, allocative and profit maximizing efficiencies are achieved at the same output level.
1) The document discusses graph transformations of functions including shifting curves vertically or horizontally, reflecting in the x-axis or y-axis, and stretching or compressing graphs.
2) It provides examples of how to sketch the graph of a function after a transformation based on the original function and explains how to write the equation of a transformed curve.
3) The second half discusses using graphs to solve economics problems like finding the equilibrium price and quantity in a market with a demand and supply function. It also shows how a tax changes the supply curve.
Page 1 Microeconomics CH 9-10 Take home quiz. Mar.docxalfred4lewis58146
Page 1
Microeconomics: CH 9-10 Take home quiz.
Mark your answers on a Scantron BEFORE class. Bring your Scantron to Class On Monday,
November 26. Be sure to be on time, late Scantron forms will be penalized. Scantron forms
coming in after we complete the review in class cannot be accepted for points.
1. Perfect competition is a model of the market that assumes all of the following EXCEPT:
A) a large number of firms.
B) firms face downward-sloping demand curves.
C) firms produce identical goods.
D) many buyers.
2. Which of the following is true in a perfectly competitive market?
A) One unit of a good or service cannot be differentiated from any other on any basis.
B) Brand preferences exist but are very slight.
C) Barriers to entry are relatively strong.
D) Information is costly.
3. Marginal revenue:
A) is the slope of the average revenue curve.
B) equals the market price in perfect competition.
C) is the change in quantity divided by the change in total revenue.
D) is the price divided by the changes in quantity.
4. A firm's total output times the price at which it sells that output is:
A) net revenue.
B) total revenue.
C) average revenue.
D) marginal revenue.
5. In perfect competition:
A) price and marginal cost are the same.
B) price and marginal revenue are the same.
C) price and total revenue are the same.
D) total revenue and total variable cost are the same.
Page 2
Use the following to answer questions 6-9:
6. (Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a
perfectly competitive market. Curve M is the _______ curve.
A) ATC
B) MR
C) MC
D) AVC
7. (Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a
perfectly competitive market. Curve N is the _______ curve.
A) ATC
B) MR
C) MC
D) AVC
8. (Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a
perfectly competitive market. If the market price is P3, the firm will produce quantity
_______ and _______ in the short run.
A) q2; make a profit
B) q1; break even
C) q2; incur a loss
D) q4; incur a loss
9. (Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a
perfectly competitive market. If the market price is P4:
A) firms will leave the industry and the price will fall in the long run.
B) there will be economic profits in the short run and firms will enter the industry in
the long run driving the market price lower.
C) the market supply curve will shift to the left and price will fall in the long run.
D) the firm will continue producing q3 and will continue to make economic profits in
the long run.
Page 3
Use the following to answer questions 10-11:
10. (Exhibit: A Perfectly Competitive Firm in the Short Run) The lowest price that will
yield zero economic profits is indicated by th.
ECON 1102 Test 4 (120414) ECON 1102 Test 4 Do all 40.docxjack60216
ECON 1102 Test 4 (120414)
ECON 1102: Test 4
Do all 40 questions
Use the table below, which gives the demand for a monopolist’s output, to answer questions 1, 2 and 3.
Quantity
(units)
Price
(dollars per unit)
1 8
2 7
3 6
4 5
5 4
6 3
1) Between which two quantities is marginal revenue equal to 2?
A) 4 and 5
B) 3 and 4
C) 2 and 3
D) 1 and 2
2) Between which two quantities is demand inelastic?
A) 6 and 5
B) 5 and 4
C) 4 and 3
D) 3 and 2
3) What is the marginal revenue when output is increased from 5 to 6 units?
A) $18
B) $4
C) $3
D) -$2
4) A single-price monopoly
A) charges all consumers the lowest price that they want to pay for each unit purchased.
B) produces less output than it would if it could price discriminate.
C) eliminates all the consumer surplus.
D) creates a smaller deadweight loss than it would if it could price discriminate.
5) A single-price monopolist determines
A) its output but not its price.
B) its price but not its output.
C) both its output and its price.
D) neither its output nor its price.
6) In monopolistic competition, the presence of a large number of firms making a differentiated product
means that
A) each firm has some ability to effect the price of its particular good or service.
B) each firm must charge the same price.
C) the price is established by agreements among the different firms.
D) each firm must produce the same quantity.
7) Firms in monopolistic competition have rivals that
A) match their price increases.
B) match their price decreases.
C) agree on a common price.
D) set their prices according to the demand curves they face.
ECON 1102 Test 4 (120414)
8) When firms in monopolistic competition are making an economic profit, firms will
A) enter the industry, and demand will increase for the original firms.
B) exit the industry, and demand will increase for the firms that remain.
C) exit the industry, and demand will decrease for the firms that remain.
D) enter the industry, and demand will decrease for the original firms.
9) Firms in monopolistic competition charge prices that are ________ those of the other firms in the market.
A) close to
B) very different from
C) the same as
D) completely unrelated to
10) A monopolistically competitive firm has ________ power to set the price of its product because
________.
A) no; there are no barriers to entry
B) some; there are barriers to entry
C) no; of product differentiation
D) some; of product differentiation
11) Monopolistically competitive firms and perfectly competitive firms are alike because both types of firms
I. face downward sloping demand curves.
II. have marginal revenue curves that lie beneath their demand curves.
III. can make only zero economic profit in the long run.
A) I and II
B) I and III
C) III only
D) I only
12) Dole Co. operates in a monopolistically competitive market. Whi ...
ECON 1102 Test 3 (061416) Test 3 ECON 1102 Sec. 711 (Mic.docxSALU18
ECON 1102 Test 3 (061416)
Test 3: ECON 1102 Sec. 711 (Microeconomics)
Answer all 40 questions (Use the answer sheet)
1) The MR = MC rule applies:
A) only when the firm is a "price taker."
B) to firms in all types of industries.
C) only to monopolies.
D) only to purely competitive firms.
Answer questions 2 through 4 based on the graph below of a perfectly competitive firm
2) The profit maximizing level of output for the firm is equal to ___ units. (put your answer on the answer
sheet.)
3) At the profit maximizing level of output, the firm is earning
A) an economic loss equal to $123.50.
B) an economic loss equal to $119.00.
C) an economic loss equal to $187.00.
D) a normal profit
4) What will the firm choose to do in the short-run and why?
A) shut down because the firm incurs an economic loss
B) stay in business because it is earning a normal profit
C) stay in business because the firm's economic loss is less than fixed costs
D) stay in business because the firm is making an economic profit
5) An example of a perfectly competitive industry is
A) the market for corn in the United States.
B) a big city police department.
C) the market for French impressionists' paintings.
D) the National Football League.
6) The market for lawn services is perfectly competitive. Larry's Lawn Service cannot increase its total
revenue by raising its price because ________.
A) Larry's supply of lawn services is perfectly elastic
B) the demand for Larry's services is perfectly inelastic
C) Larry's supply of lawn services is inelastic
D) the demand for Larry's services is perfectly elastic
ECON 1102 Test 3 (061416)
7) A perfectly competitive firm will operate and incur an economic loss in the short run if
A) the loss is smaller than its total fixed costs.
B) it knows it can recoup the loss in the long run.
C) shareholders do not know about the loss.
D) the loss can offset future profits.
The table below shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local
market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $8.
Answer questions 8 through 11 based on the numbers in the table.
Output
(sandwiches per hour)
Average total cost
($ per sandwich)
1 17.00
2 10.00
3 8.00
4 8.00
5 8.80
6 10.00
8) What is Evan's marginal revenue from the 2nd sandwich sold? ____
9) If Evan's sells the 5th sandwich, the marginal cost is ________ the marginal revenue, so the firm's profit
________.
A) greater than; decreases
B) greater than; increases
C) less than; increases
D) less than; decreases
10) What quantity of sandwiches produced will maximize Evan's economic profit in the short run?
A) 2 sandwiches per hour
B) 3 sandwiches per hour
C) 4 sandwiches per hour
D) 5 sandwiches per hour
11) If the market price does not change, Evan's will
A) continue to operate in ...
Unit 9AB224 MicroeconomicsUnit 9 Assignment Monopoly.docxhallettfaustina
Unit 9
AB224 | Microeconomics
Unit 9 Assignment: Monopoly Pricing
Name:
Course Number and Section: AB224–0X
Date:
General Instructions for all Assignments
1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format: Course number_section number_Last_First_unit number
2. At the top of the template, insert the appropriate information: Your Name, Course Number and Section, and the Date
3. Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow APA format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style (double spaced, in Times New Roman, 12–point, and black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.
4. Upload the completed Assignment to the appropriate Dropbox.
5. Any questions about the Assignment, or format questions, should be directed to your course instructor.
Assignment
In this Assignment, you will demonstrate your understanding of monopoly pricing, based on different management criteria, the impact of price regulation of monopolies, and provide detailed explanations of how price effect and quantity effect cause marginal revenue to be different from the price.
Questions
1. The Gulf Sea Turtle Conservation Group (GSTCG), a 501(c) (3) non–profit group of volunteers working to collect data on nesting sea turtles and to promote sea turtle conservation, is considering creating a video to educate people about sea turtle conservation. The cost of duplicating the video on a DVD and mailing the DVD is $6.58. In a GSTCG member meeting, the video plan was discussed. Table 1. shows the expected demand for the DVD at different suggested donation levels, and they can act as a single-price monopolist if they choose to. The receipts will be used to fund GSTCG supplies for their data collection and conservation work. At the end of each sea turtle nesting season, any excess funds are donated by the GSTCG to a local non-profit sea turtle research and rehabilitation facility.
Table 1.
Suggested Donation per DVD Request
Anticipated Number of DVD Requests
$19.00
0
$15.00
2
$9.50
4
$7.75
10
$3.00
15
$0.00
20
a. Complete Table 2. by computing the Total Revenue, Marginal Revenue, and Profit columns.
Table 2.
Suggested Donation per DVD Request
Anticipated Number of DVD Requests
Total Revenue
Marginal Revenue
PROFIT
$19.00
0
$15.00
2
$9.50
4
$7.75
10
$3.00
15
$0.00
20
b. The President wants the GSTCG to provide videos to generate the most possible donations (Total Revenue). What price is the President of the GSTCG favoring and how many people will receive the DVD if this becomes the price of the suggested donati ...
PAGE 4Multiple-Choice Questions1. The difference betwee.docxalfred4lewis58146
PAGE
4
Multiple-Choice Questions
1. The difference between the short-run and the long-run production function is:
a. three months or one business quarter.
b. the time it takes for firms to change all production inputs.
c. the time it takes for firms to change only their variable inputs.
d. more information is required to answer this question.
2. Which of the following statements about the short-run production function is true?
a. MP always equals AP at the maximum point of MP.
b. MP always equals zero when TP is at its maximum.
c. TP starts to decline at the point of diminishing returns.
d. When MP diminishes, AP is at its minimum point.
e. None of the above is true.
3. Assume a firm employs 10 workers and pays each $15 per hour. Further assume that the MP of the 10th worker is 5 units of output and that the price of the output is $4. According to economic theory, in the short run
a. the firm should hire additional workers
b. the firm should reduce the number of workers employed
c. the firm should continue to employ 10 workers.
d. more information is required to answer this question.
4. A firm using two inputs, X and Y, is using them in the most efficient manner when
a. MPX = MPY
b. PX = PY and MPX = MPY
c. MPX/PY = MPY/PX
d. MPX/MPY = PX/PY
5. Average fixed cost is
a. AC minus AVC
b. TC divided by Q
c. AVC minus MC
d. TC minus TVC
6. Diseconomies of scale can be caused by
a. the law of diminishing returns.
b. bureaucratic inefficiencies.
c. increasing advertising and promotional costs.
d. all of the above.
7. Which of the following cost relationship is not true?
a. AFC = AC - MC
b. TVC = TC - TFC
c. the change in TVC divided by the change in Q = MC
d. the change in TC divided by the change in Q = MC
8. When a firm produces at the point where MR = MC, and the price of its product is higher that the cost per unit, the profit that it is earning is considered to be
a. maximum
b. normal
c. above normal
d. below normal
9. Which of the following is not characteristic of perfect competition?
a. A differentiated product
b. No barriers to entry
c. Large number of buyers
d. Complete knowledge of market price
10. Suppose a firm is currently maximizing its profits (i.e., following the MR = MC rule). Assuming that it wants to continue maximizing its profits, if its fixed costs increase, it should
a. maintain the same price
b. raise its price
c. lower its price
d. not enough information to answer this question
11. Which of the following is true about a monopoly?
a. Its demand curve is generally less elastic than in more competitive markets.
b. It will always earn economic profit.
c. It will charge the highest possible price.
d. It will always be subject to government regulations.
12. If an oligopolistic firm decides to raise its price,
a. other firms will automatically follow.
b. none of the other firms will follow.
c. other firms may follow if it is the price leader.
d. None of the above.
13.
Supported Multiple Choice Questions for Unit 3 Economicstutor2u
Maximum mark is 2/4 if the incorrect answer is given
Knock-outs / rejection explanations:
Incorrect options can be knocked out, if relevant economic reasoning is given, for 1 mark each time.
Up to two knock out marks can be awarded for each supported choice question
There must be some valid economics rationale to the answer in order to earn a mark (this is vital)
Good practice
Define key terms in the question / or in the correct answer stem
Application to the specific context is always encouraged
Draw supporting analysis diagrams (fully labelled)
Annotate clearly and fully any diagrams that are provided
Complete tables of data where necessary
Write in proper sentences but bullet them for emphasis
Practice papers to increase the speed and accuracy of your answers. Work systematically through the specification.
1) The document summarizes key concepts from Chapter 3 of a macroeconomics textbook, including how total national income is determined by aggregate supply and demand.
2) It explains how factor prices like wages and rental rates are determined by supply and demand in factor markets and how this determines the distribution of total income.
3) It outlines the components of aggregate demand - consumption, investment, and government spending - and how their interaction with aggregate supply determines equilibrium in the goods market and the loanable funds market.
The document discusses key concepts in microeconomics including:
1) Utility refers to how consumers rank goods and services based on satisfaction. Marginal utility is the additional satisfaction from consuming one more unit of a good. The law of diminishing marginal utility states that utility grows at a slower rate as more is consumed.
2) Consumers maximize utility when the marginal utility per dollar is equal for all goods purchased. Demand curves slope downward because consumers want less of a good at a higher price. Substitution and income effects explain how consumption changes when a good's price increases.
3) Elasticity measures the responsiveness of quantity to price changes. Demand is more inelastic for addictive drugs than casual drugs.
This document explains the Bertrand model of competition using Coca-Cola and Pepsi as an example. The Bertrand model assumes that firms in an oligopoly compete on price rather than quantity. It describes how Joseph Bertrand improved upon the Cournot model by using price rather than quantity as the strategic variable. The model assumes firms produce differentiated products and set prices to maximize profits, resulting in an equilibrium price equal to marginal cost. However, the model makes unrealistic assumptions and may not accurately describe real-world oligopolistic competition between firms like Coke and Pepsi.
Principles of Microeconomics Midterm 1 "Cheat Sheet"Laurel Ayuyao
Definitions and charts for microeconomics; Topics include: trade, opportunity cost, shifts in supply and demand, consumer and producer surplus, etc. (Made for ECON 10010 at University of Notre Dame)
In the long run, all inputs including capital and labor can be varied as a firm changes its scale of production. As scale increases, a firm may experience economies of scale where average total cost decreases, constant returns to scale where average total cost remains the same, or diseconomies of scale where average total cost increases. The long-run average cost curve depicts the lowest attainable average total cost for a given output level as a firm adjusts its size.
This document presents an analysis of imperfect competition with internal scale economies and homogeneous goods. It discusses the key assumptions of the model, including increasing returns to scale production of homogeneous goods (X) and competitive production of other goods (Y). Under autarky, the X industry exhibits imperfect competition due to internal scale economies. Equilibrium occurs where price exceeds average cost for firms in industry X, but is below marginal cost, resulting in underproduction. The document then analyzes how trade can generate pro-competitive gains under two scenarios: 1) with a fixed number of firms and 2) with free entry and exit of firms. It finds trade can increase production, lower prices and average costs in industry X by enhancing competition in both scenarios.
Profit maximization and perfect competitionjaveria gul
1) A firm produces at the quantity where marginal revenue equals marginal cost to maximize profits. This is the point where additional revenue from producing another unit equals the additional costs.
2) A firm's profit is maximized by producing at the output level where marginal revenue equals marginal cost. Producing more would mean marginal costs exceed marginal revenues, reducing profits.
3) In the short run, a competitive firm will produce the quantity where marginal revenue equals marginal cost to maximize profits. The firm's profit is represented by the rectangle between average total cost and marginal cost at the profit-maximizing quantity.
Principles of Economics TestBank Chapter曼昆《经济学原理》(微观)第五版测试题库 (20)Molly Ray
This document contains a chapter on income inequality and poverty that includes:
- True/false questions about concepts like the poverty line, income inequality in different countries, and government programs.
- Short answer questions defining key terms and comparing theories like the life cycle hypothesis and permanent income hypothesis.
- Descriptions of philosophical views on redistribution including utilitarianism, liberalism, and libertarianism.
The document discusses the principle of least cost combinations for a firm using two factors of production, labor and capital. It states that a rational firm will combine inputs in a way that minimizes costs while maximizing output. This optimal combination occurs where the marginal productivity per unit of each input divided by its price is equal between the two inputs. Isoquants and isocost lines are introduced to illustrate the combinations that achieve least cost.
1) El documento discute diferentes tipos de mercados como mercados perfectamente competitivos, monopolios puros y oligopolios.
2) Explica las características de un mercado perfectamente competitivo como numerosos compradores y vendedores, entrada y salida libre, conocimiento perfecto, bienes homogéneos, costos y beneficios externos.
3) También define monopolio puro, oligopolio y competencia como conceptos clave relacionados con los mercados.
DSM-5: Trauma and Stress Related Disorders, Dissociative Disorders, Feeding/E...Christine Chasek
This document provides an overview of Trauma- and Stressor-Related Disorders as categorized in the DSM-5. It describes the new category and disorders included, such as Posttraumatic Stress Disorder, Acute Stress Disorder, and Adjustment Disorders. Criteria for specific disorders are outlined and treatment options discussed, including various forms of psychotherapy and medications.
MCQs of Elasticity of Demand and SupplyEjaz Dilshad
This document contains 35 multiple choice questions related to concepts in microeconomics including:
- Price elasticity of demand and supply
- Determinants and shifts of demand and supply curves
- Effects of price floors, price ceilings, and taxes
- Characteristics and definitions of normal goods, inferior goods, substitutes and complements
- Measurement and interpretation of elasticity coefficients
This document discusses demand, supply, and market equilibrium. It defines demand as the quantity of a good consumers are willing to purchase at different prices. Supply is defined as the quantity producers are willing to provide at different prices. The law of demand and supply state that demand is negatively related to price and supply is positively related to price. Market equilibrium occurs where quantity demanded equals quantity supplied at the market clearing price. The document provides examples of how equilibrium price and quantity change when demand or supply shifts.
Perfect competition is a market structure with many small firms, homogeneous products, perfect information and free entry and exit. In the short run, firms maximize profits where marginal cost (MC) equals marginal revenue (MR). Abnormal profits attract new firms, lowering prices to normal profits when MC equals average cost (AC). Allocative efficiency occurs where MC equals average revenue (AR). In the long run, productive, allocative and profit maximizing efficiencies are achieved at the same output level.
1) The document discusses graph transformations of functions including shifting curves vertically or horizontally, reflecting in the x-axis or y-axis, and stretching or compressing graphs.
2) It provides examples of how to sketch the graph of a function after a transformation based on the original function and explains how to write the equation of a transformed curve.
3) The second half discusses using graphs to solve economics problems like finding the equilibrium price and quantity in a market with a demand and supply function. It also shows how a tax changes the supply curve.
Page 1 Microeconomics CH 9-10 Take home quiz. Mar.docxalfred4lewis58146
Page 1
Microeconomics: CH 9-10 Take home quiz.
Mark your answers on a Scantron BEFORE class. Bring your Scantron to Class On Monday,
November 26. Be sure to be on time, late Scantron forms will be penalized. Scantron forms
coming in after we complete the review in class cannot be accepted for points.
1. Perfect competition is a model of the market that assumes all of the following EXCEPT:
A) a large number of firms.
B) firms face downward-sloping demand curves.
C) firms produce identical goods.
D) many buyers.
2. Which of the following is true in a perfectly competitive market?
A) One unit of a good or service cannot be differentiated from any other on any basis.
B) Brand preferences exist but are very slight.
C) Barriers to entry are relatively strong.
D) Information is costly.
3. Marginal revenue:
A) is the slope of the average revenue curve.
B) equals the market price in perfect competition.
C) is the change in quantity divided by the change in total revenue.
D) is the price divided by the changes in quantity.
4. A firm's total output times the price at which it sells that output is:
A) net revenue.
B) total revenue.
C) average revenue.
D) marginal revenue.
5. In perfect competition:
A) price and marginal cost are the same.
B) price and marginal revenue are the same.
C) price and total revenue are the same.
D) total revenue and total variable cost are the same.
Page 2
Use the following to answer questions 6-9:
6. (Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a
perfectly competitive market. Curve M is the _______ curve.
A) ATC
B) MR
C) MC
D) AVC
7. (Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a
perfectly competitive market. Curve N is the _______ curve.
A) ATC
B) MR
C) MC
D) AVC
8. (Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a
perfectly competitive market. If the market price is P3, the firm will produce quantity
_______ and _______ in the short run.
A) q2; make a profit
B) q1; break even
C) q2; incur a loss
D) q4; incur a loss
9. (Exhibit: Profit Maximizing) The exhibit shows cost curves for a firm operating in a
perfectly competitive market. If the market price is P4:
A) firms will leave the industry and the price will fall in the long run.
B) there will be economic profits in the short run and firms will enter the industry in
the long run driving the market price lower.
C) the market supply curve will shift to the left and price will fall in the long run.
D) the firm will continue producing q3 and will continue to make economic profits in
the long run.
Page 3
Use the following to answer questions 10-11:
10. (Exhibit: A Perfectly Competitive Firm in the Short Run) The lowest price that will
yield zero economic profits is indicated by th.
ECON 1102 Test 4 (120414) ECON 1102 Test 4 Do all 40.docxjack60216
ECON 1102 Test 4 (120414)
ECON 1102: Test 4
Do all 40 questions
Use the table below, which gives the demand for a monopolist’s output, to answer questions 1, 2 and 3.
Quantity
(units)
Price
(dollars per unit)
1 8
2 7
3 6
4 5
5 4
6 3
1) Between which two quantities is marginal revenue equal to 2?
A) 4 and 5
B) 3 and 4
C) 2 and 3
D) 1 and 2
2) Between which two quantities is demand inelastic?
A) 6 and 5
B) 5 and 4
C) 4 and 3
D) 3 and 2
3) What is the marginal revenue when output is increased from 5 to 6 units?
A) $18
B) $4
C) $3
D) -$2
4) A single-price monopoly
A) charges all consumers the lowest price that they want to pay for each unit purchased.
B) produces less output than it would if it could price discriminate.
C) eliminates all the consumer surplus.
D) creates a smaller deadweight loss than it would if it could price discriminate.
5) A single-price monopolist determines
A) its output but not its price.
B) its price but not its output.
C) both its output and its price.
D) neither its output nor its price.
6) In monopolistic competition, the presence of a large number of firms making a differentiated product
means that
A) each firm has some ability to effect the price of its particular good or service.
B) each firm must charge the same price.
C) the price is established by agreements among the different firms.
D) each firm must produce the same quantity.
7) Firms in monopolistic competition have rivals that
A) match their price increases.
B) match their price decreases.
C) agree on a common price.
D) set their prices according to the demand curves they face.
ECON 1102 Test 4 (120414)
8) When firms in monopolistic competition are making an economic profit, firms will
A) enter the industry, and demand will increase for the original firms.
B) exit the industry, and demand will increase for the firms that remain.
C) exit the industry, and demand will decrease for the firms that remain.
D) enter the industry, and demand will decrease for the original firms.
9) Firms in monopolistic competition charge prices that are ________ those of the other firms in the market.
A) close to
B) very different from
C) the same as
D) completely unrelated to
10) A monopolistically competitive firm has ________ power to set the price of its product because
________.
A) no; there are no barriers to entry
B) some; there are barriers to entry
C) no; of product differentiation
D) some; of product differentiation
11) Monopolistically competitive firms and perfectly competitive firms are alike because both types of firms
I. face downward sloping demand curves.
II. have marginal revenue curves that lie beneath their demand curves.
III. can make only zero economic profit in the long run.
A) I and II
B) I and III
C) III only
D) I only
12) Dole Co. operates in a monopolistically competitive market. Whi ...
ECON 1102 Test 3 (061416) Test 3 ECON 1102 Sec. 711 (Mic.docxSALU18
ECON 1102 Test 3 (061416)
Test 3: ECON 1102 Sec. 711 (Microeconomics)
Answer all 40 questions (Use the answer sheet)
1) The MR = MC rule applies:
A) only when the firm is a "price taker."
B) to firms in all types of industries.
C) only to monopolies.
D) only to purely competitive firms.
Answer questions 2 through 4 based on the graph below of a perfectly competitive firm
2) The profit maximizing level of output for the firm is equal to ___ units. (put your answer on the answer
sheet.)
3) At the profit maximizing level of output, the firm is earning
A) an economic loss equal to $123.50.
B) an economic loss equal to $119.00.
C) an economic loss equal to $187.00.
D) a normal profit
4) What will the firm choose to do in the short-run and why?
A) shut down because the firm incurs an economic loss
B) stay in business because it is earning a normal profit
C) stay in business because the firm's economic loss is less than fixed costs
D) stay in business because the firm is making an economic profit
5) An example of a perfectly competitive industry is
A) the market for corn in the United States.
B) a big city police department.
C) the market for French impressionists' paintings.
D) the National Football League.
6) The market for lawn services is perfectly competitive. Larry's Lawn Service cannot increase its total
revenue by raising its price because ________.
A) Larry's supply of lawn services is perfectly elastic
B) the demand for Larry's services is perfectly inelastic
C) Larry's supply of lawn services is inelastic
D) the demand for Larry's services is perfectly elastic
ECON 1102 Test 3 (061416)
7) A perfectly competitive firm will operate and incur an economic loss in the short run if
A) the loss is smaller than its total fixed costs.
B) it knows it can recoup the loss in the long run.
C) shareholders do not know about the loss.
D) the loss can offset future profits.
The table below shows output and costs of Evan's Subs, a typical perfectly competitive firm in a local
market for sandwiches. Evan's fixed cost is $9 per hour. The current market price of a sandwich is $8.
Answer questions 8 through 11 based on the numbers in the table.
Output
(sandwiches per hour)
Average total cost
($ per sandwich)
1 17.00
2 10.00
3 8.00
4 8.00
5 8.80
6 10.00
8) What is Evan's marginal revenue from the 2nd sandwich sold? ____
9) If Evan's sells the 5th sandwich, the marginal cost is ________ the marginal revenue, so the firm's profit
________.
A) greater than; decreases
B) greater than; increases
C) less than; increases
D) less than; decreases
10) What quantity of sandwiches produced will maximize Evan's economic profit in the short run?
A) 2 sandwiches per hour
B) 3 sandwiches per hour
C) 4 sandwiches per hour
D) 5 sandwiches per hour
11) If the market price does not change, Evan's will
A) continue to operate in ...
Unit 9AB224 MicroeconomicsUnit 9 Assignment Monopoly.docxhallettfaustina
Unit 9
AB224 | Microeconomics
Unit 9 Assignment: Monopoly Pricing
Name:
Course Number and Section: AB224–0X
Date:
General Instructions for all Assignments
1. Unless specified differently by your course instructor, save this assignment template to your computer with the following file naming format: Course number_section number_Last_First_unit number
2. At the top of the template, insert the appropriate information: Your Name, Course Number and Section, and the Date
3. Insert your answers below, or in the appropriate space provided for in the question. Your answers should follow APA format with citations to your sources and, at the bottom of your last page, a list of references. Your answers should also be in Standard English with correct spelling, punctuation, grammar, and style (double spaced, in Times New Roman, 12–point, and black font). Respond to questions in a thorough manner, providing specific examples of concepts, topics, definitions, and other elements asked for in the questions.
4. Upload the completed Assignment to the appropriate Dropbox.
5. Any questions about the Assignment, or format questions, should be directed to your course instructor.
Assignment
In this Assignment, you will demonstrate your understanding of monopoly pricing, based on different management criteria, the impact of price regulation of monopolies, and provide detailed explanations of how price effect and quantity effect cause marginal revenue to be different from the price.
Questions
1. The Gulf Sea Turtle Conservation Group (GSTCG), a 501(c) (3) non–profit group of volunteers working to collect data on nesting sea turtles and to promote sea turtle conservation, is considering creating a video to educate people about sea turtle conservation. The cost of duplicating the video on a DVD and mailing the DVD is $6.58. In a GSTCG member meeting, the video plan was discussed. Table 1. shows the expected demand for the DVD at different suggested donation levels, and they can act as a single-price monopolist if they choose to. The receipts will be used to fund GSTCG supplies for their data collection and conservation work. At the end of each sea turtle nesting season, any excess funds are donated by the GSTCG to a local non-profit sea turtle research and rehabilitation facility.
Table 1.
Suggested Donation per DVD Request
Anticipated Number of DVD Requests
$19.00
0
$15.00
2
$9.50
4
$7.75
10
$3.00
15
$0.00
20
a. Complete Table 2. by computing the Total Revenue, Marginal Revenue, and Profit columns.
Table 2.
Suggested Donation per DVD Request
Anticipated Number of DVD Requests
Total Revenue
Marginal Revenue
PROFIT
$19.00
0
$15.00
2
$9.50
4
$7.75
10
$3.00
15
$0.00
20
b. The President wants the GSTCG to provide videos to generate the most possible donations (Total Revenue). What price is the President of the GSTCG favoring and how many people will receive the DVD if this becomes the price of the suggested donati ...
PAGE 4Multiple-Choice Questions1. The difference betwee.docxalfred4lewis58146
PAGE
4
Multiple-Choice Questions
1. The difference between the short-run and the long-run production function is:
a. three months or one business quarter.
b. the time it takes for firms to change all production inputs.
c. the time it takes for firms to change only their variable inputs.
d. more information is required to answer this question.
2. Which of the following statements about the short-run production function is true?
a. MP always equals AP at the maximum point of MP.
b. MP always equals zero when TP is at its maximum.
c. TP starts to decline at the point of diminishing returns.
d. When MP diminishes, AP is at its minimum point.
e. None of the above is true.
3. Assume a firm employs 10 workers and pays each $15 per hour. Further assume that the MP of the 10th worker is 5 units of output and that the price of the output is $4. According to economic theory, in the short run
a. the firm should hire additional workers
b. the firm should reduce the number of workers employed
c. the firm should continue to employ 10 workers.
d. more information is required to answer this question.
4. A firm using two inputs, X and Y, is using them in the most efficient manner when
a. MPX = MPY
b. PX = PY and MPX = MPY
c. MPX/PY = MPY/PX
d. MPX/MPY = PX/PY
5. Average fixed cost is
a. AC minus AVC
b. TC divided by Q
c. AVC minus MC
d. TC minus TVC
6. Diseconomies of scale can be caused by
a. the law of diminishing returns.
b. bureaucratic inefficiencies.
c. increasing advertising and promotional costs.
d. all of the above.
7. Which of the following cost relationship is not true?
a. AFC = AC - MC
b. TVC = TC - TFC
c. the change in TVC divided by the change in Q = MC
d. the change in TC divided by the change in Q = MC
8. When a firm produces at the point where MR = MC, and the price of its product is higher that the cost per unit, the profit that it is earning is considered to be
a. maximum
b. normal
c. above normal
d. below normal
9. Which of the following is not characteristic of perfect competition?
a. A differentiated product
b. No barriers to entry
c. Large number of buyers
d. Complete knowledge of market price
10. Suppose a firm is currently maximizing its profits (i.e., following the MR = MC rule). Assuming that it wants to continue maximizing its profits, if its fixed costs increase, it should
a. maintain the same price
b. raise its price
c. lower its price
d. not enough information to answer this question
11. Which of the following is true about a monopoly?
a. Its demand curve is generally less elastic than in more competitive markets.
b. It will always earn economic profit.
c. It will charge the highest possible price.
d. It will always be subject to government regulations.
12. If an oligopolistic firm decides to raise its price,
a. other firms will automatically follow.
b. none of the other firms will follow.
c. other firms may follow if it is the price leader.
d. None of the above.
13.
Supported Multiple Choice Questions for Unit 3 Economicstutor2u
Maximum mark is 2/4 if the incorrect answer is given
Knock-outs / rejection explanations:
Incorrect options can be knocked out, if relevant economic reasoning is given, for 1 mark each time.
Up to two knock out marks can be awarded for each supported choice question
There must be some valid economics rationale to the answer in order to earn a mark (this is vital)
Good practice
Define key terms in the question / or in the correct answer stem
Application to the specific context is always encouraged
Draw supporting analysis diagrams (fully labelled)
Annotate clearly and fully any diagrams that are provided
Complete tables of data where necessary
Write in proper sentences but bullet them for emphasis
Practice papers to increase the speed and accuracy of your answers. Work systematically through the specification.
1. Which is a characteristic of monopolistic competitionA).docxjackiewalcutt
1. Which is a characteristic of monopolistic competition?
A) standardized product C) absence of nonprice competition
B) a relatively small number of firms D) relatively easy entry
2. In which industry is monopolistic competition most likely to be found?
A) utilities B) agriculture C) retail trade D) mining
3. One difference between monopolistic competition and pure competition is that:
A) products can be standardized or differentiated in pure competition.
B) there is some control over price in monopolistic competition.
C) monopolistic competition has significant barriers to entry.
D) firms differentiate their products in pure competition.
4. The monopolistically competitive seller's demand curve will become more elastic the:
A) larger the number of competitors. C) more significant the barriers to entry.
B) greater the degree of product differentiation. D) smaller the number of competitors.
5. A monopolistically competitive firm is producing at an output level in the short run where average total cost is $4.50, price is $4.00, marginal revenue is $2.50, and marginal cost is $2.50. This firm is operating:
A) with a profit in the short run.
B) with a loss in the short run.
C) at the break-even level of output in the short run.
D) at an efficient level of output in the short run.
6. Refer to the above graph. In the short run, this monopolistically competitive firm will set price at:
A) $65 and produce 45 units of output. C) $50 and produce 35 units of output.
B) $65 and produce 35 units of output. D) $50 and produce 50 units of output.
7. Refer to the above graph. This monopolistically competitive firm is:
A) making economic profit in the long run. C) earning only normal profit in the long run.
B) making economic profit in the short run. D) earning only normal profit in the short run.
8. If monopolistically competitive firms in an industry are making an economic profit, then:
A) new firms will enter the industry and product demand will increase for the existing firms.
B) firms will exit the industry and product demand will decrease for the firms that remain.
C) firms will exit the industry and product demand will increase for the firms that remain.
D) new firms will enter the industry and product demand will decrease for the existing firms.
9. Suppose some firms exit an industry characterized by monopolistic competition. We would expect the demand curve of a firm already in the industry to:
A) shift to the left.
B) shift to the right.
C) become more elastic.
D) remain the same since entering firms serve other customers in the market.
10. Refer to the above graphs. A short-run equilibrium that would produce profits for a monopolistically competitive firm would be represented by graph:
A) A. B) B. C) C. D) D.
11. Refer to the above graphs. A short-run equilibrium that would produce losses for a monopolistically competitive firm would be represented by graph:
A) A. B) B. C) ...
2.5 PointsA manager should always reject a special order if.docxvickeryr87
2.5 Points
A manager should always reject a special order if:
A. the special order price is less than the variable costs of the order.
B. there is available excess capacity.
C. the special order price is less than the regular sales price.
D. the special order will require variable nonmanufacturing expenses.
Question 2 of 40
2.5 Points
The effect of a plant closing on employee morale is an example of which of the following?
A. A qualitative factor
B. A quantitative factor
C. A sunk cost
D. A variable cost
Question 3 of 40
2.5 Points
Corny and Sweet grows and sells sweet corn at its roadside produce stand. The selling price per dozen is $3.75, variable costs are $1.25 per dozen, and total fixed costs are $750.00. What are breakeven sales in dollars?
A. $563
B. $300
C. $375
D. $1,125
Question 4 of 40
2.5 Points
Which of the following best describes a "sunk cost"?
A. Costs that were incurred in the past and cannot be changed
B. Benefits foregone by choosing a particular alternative course of action
C. A factor that restricts the production or sale of a product
D. Expected future data that differ among alternatives
Question 5 of 40
2.5 Points
Pluto Incorporated provided the following information regarding its single product:
Direct materials used
$240,000
Direct labor incurred
$420,000
Variable manufacturing overhead
$160,000
Fixed manufacturing overhead
$100,000
Variable selling and administrative expenses
$60,000
Fixed selling and administrative expenses
$20,000
The regular selling price for the product is $80. The annual quantity of units produced and sold is 40,000 units (the costs above relate to the 40,000 units production level). The company has excess capacity and regular sales will not be affected by this special order. There was no beginning inventory. What would be the effect on operating income of accepting a special order for 3,500 units at a sale price of $55 per product?
A. Increase by $115,500
B. Increase by $269,500
C. Decrease by $115,500
D. Decrease by $269,500
Question 6 of 40
2.5 Points
A product is sold at $60.00 per unit, the variable expense per unit is $30, and total fixed expenses are $200,000, what are the breakeven sales in dollars?
A. $3,333
B. $100,000
C. $133,333
D. $400,000
Question 7 of 40
2.5 Points
"Contribution margin per unit" is best described by which of the following?
A. Sales price per unit minus fixed cost per unit
B. Sales price per unit minus variable cost unit
C. Sales price per unit minus fixed and variable costs per unit
D. Units sold time contribution margin ratio
Question 8 of 40
2.5 Points
If total fixed costs are $455,000, the contribution margin per unit is $25.00, and targeted operating income is $25,000, how many units must be sold to breakeven?
A. 11,375,000
B. 19,200
C. 18,200
D. 625,000
Question 9 of 40
2.5 Points
The horizo.
This document contains a series of questions and answers related to economic analysis for business decisions. Specifically, it covers topics like demand elasticity, oligopoly models, monopolistic competition, costs of production including fixed, variable and marginal costs. It discusses key concepts such as profit maximization for firms with different market structures, the shapes of cost curves like average total cost and how they are impacted by factors like diminishing returns. The document is a study guide or quiz for students to test their understanding of foundational microeconomics topics.
A manager should always reject a special order ifA. the s.docxevonnehoggarth79783
This document contains information about several companies and their operations, including production levels, sales prices, variable and fixed costs, and special order scenarios. It provides data to calculate items like breakeven point, operating income effects of special orders, and return on investment. The key details are sales, production, costs, and calculations to determine profitability metrics under different conditions.
A manager should always reject a special order ifA. t.docxevonnehoggarth79783
A manager should always reject a special order if:
A. the special order price is less than the variable costs of the order.
B. there is available excess capacity.
C. the special order price is less than the regular sales price.
D. the special order will require variable nonmanufacturing expenses.
To find the breakeven point using the shortcut formulas, you use:
A. zero for the contribution margin per unit.
B. zero for the fixed expenses.
C. zero for the contribution margin ratio.
D. zero for the operating income.
A product is sold at $60.00 per unit, the variable expense per unit is $30, and total fixed expenses are $200,000, what are the breakeven sales in dollars?
A. $3,333
B. $100,000
C. $133,333
D. $400,000
Sky High Seats manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but is currently producing and selling 75,000 seats per year. The following information relates to current production:
Sale price per unit
$400
Variable costs per unit:
$220
Manufacturing
$50
Marketing and administrative
Total fixed costs:
Manufacturing
$750,000
Marketing and administrative
$200,000
If a special sales order is accepted for 3,000 seats at a price of $300 per unit, and fixed costs increase by $10,000, how would operating income be affected? (NOTE: Assume regular sales are not affected by the special order.)
A. Decrease by $80,000
B. Increase by $230,000
C. Increase by $90,000
D. Increase by $80,000
The breakeven point may be defined as the number of units a company must sell to do which of the following?
A. Generate a net loss
B. Generate a zero profit
C. Earn more net income than the previous accounting period
D. Generate a net income
Question 6 of 40
2.5 Points
The area to the right of the breakeven point and between the total revenue line and the total expense line represents:
A. expected profits.
B. expected losses.
C. variable expenses.
D. fixed expenses.
Question 7 of 40
2.5 Points
The horizontal line intersecting the vertical y-axis at the level of total cost on a CVP graph represents:
A. total costs.
B. total variable costs.
C. total fixed costs.
D. breakeven point.
Question 8 of 40
2.5 Points
The Muffin House produces and sells a variety of muffins. The selling price per dozen is $15, variable costs are $9 per dozen, and total fixed costs are $4,200. How many dozen muffins must The Muffin House sell to breakeven?
A. 10,500
B. 700
C. 280
D. 175
Question 9 of 40
2.5 Points
Corny and Sweet grows and sells sweet corn at its roadside produce stand. The selling price per dozen is $3.75, variable costs are $1.25 per dozen, and total fixed costs are $750.00. What are breakeven sales in dollars?
A. $563
B. $300
C. $375
D. $1,125
Question 10 of 40
2.5 Points
Pluto Incorporated provided the following information regarding its single product:
Direct m.
1. Should the federal government continue to provide Amtrak .docxpaynetawnya
1. Should the federal government continue to provide Amtrak with subsides? Provide economic arguments for and against and explain which you believe is soundest based on your understanding.
2. Based on the economic concepts of opportunity costs and the profit motive (defined broadly as the desire to become better through our choices), hoe should your limited resources of time and energy be allocated between market work, nonmarket work and leisure? Provided examples
3. Explain how economies of scale can be a barrier to entry.
4. Identify the other two barriers to entry and explain how they block new firms from this market.
5. Suppose that a certain manufacturer has a monopoly on the sorority and fraternity ring business because it has persuaded the “Greeks” to give it exclusive rights to their insignia.
a. Using demand and coast curves, draw a diagram depicting the firm’s profit- maximizing price and output level.
b. Why is marginal revenue less than price for this firm?
c. On your diagram, show the deadweight loss that occurs because the output level is determined by a monopoly rather than by a competitive market.
d. What would happen to price and output if the Greeks decided to charge the manufacturer a royalty fee of $3 per ring?
6. List three conditions that must be met for a monopolist to price discriminate successfully.
7. Why is the perfectly discriminating monopolist’s marginal revenue curve identical to the demand curve it faces?
8. A monopolistically competitive firm faces the following demand and cost structure in the short run:
Output Price FC VC TC TR Profit/Loss
0 100 100 0
1 90 50
2 80 90
3 70 150
4 60 230
5 50 330
6 40 450
7 30 590
a. Complete the table
b. What is the highest profit or lowest loss available to this firm?
c. Should the firm operate or shut down in the short run? Why?
d. What is the relationship between marginal revenue and marginal cost as the firm increase output?
9. Illustrated below are the marginal cost and average total cost curves for a small firm that is in long-run equilibrium.
a. Locate the long run- equilibrium price and quantity if the firm is perfectly competitive.
b. Label the price and quantity p1 and q1.
c. Draw in a demand and marginal revenue curve to illustrate long-run equilibrium if the firm is monopolistically competitive. Label the price and quantity p2 and q2.
d. How do the monopolistically competitive firm’s price and output compare to those of the perfectly competitive firm?
e. How do long-run profits compare for the two types of firms?
10. Why is a firm in monopolistic competition said to be competitive? In What sense is tha ...
This document contains 20 multiple choice questions about managerial economics from chapters 1-4. The questions cover topics such as characteristics of perfect competition, profit maximization, factors that affect demand and supply, determinants of demand, and equilibrium concepts. For each question there are 4 answer options and the correct answers are provided at the end.
[MT445 | Managerial Economics]
Unit 5 Assignment
Student Name:
Please answer the following questions. Submit as a Microsoft Word® document to the Dropbox when completed.
1. How does the demand curve faced by a perfectly competitive firm differ from the market demand curve in a perfectly competitive market? Explain.
2. A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm’s product is $140.
Output
FC
VC
TC
TR
Profit/Loss
0
$90
$ 0
___
___
___
1
90
90
___
___
___
2
90
170
___
___
___
3
90
290
___
___
___
4
90
430
___
___
___
5
90
590
___
___
___
6
90
770
___
___
___
a.
Complete the table.
b.
What level of output should the firm produce to maximize profits?
c.
Assume this firm is making a loss when it produces its 7th unit of output. What should the firm do in the short-run?
3. How does the profit maximization condition for a monopoly differ from that for a perfectly competitive firm? How does this difference impact efficiency under each market structure?
4. The following table provides market share information about the soft-drink industry.
Company
Market Share
Coca-Cola
37%
Pepsi-Co
35
Cadbury Schweppers
17
Other
11
a. Do you think the Department of Justice and the Federal Trade Commission would approve a merger between any two of the first three companies listed? Explain.
b. Do you think this market has barriers to entry? If so, what might they be?
Directions for Submitting your Assignment
Complete your Assignment in this Microsoft Word® document and save it as Username-MT445Assignment-Unit#.doc (Example:TAllen-MT445Assignment-Unit5.doc). Submit your file by selecting the Unit 5: Assignment Dropbox by the end of Unit 5.
Unit 5 Assignment
Content and Analysis
Points Possible
Points Earned
Problem #1
How does the demand curve faced by a perfectly competitive firm differ from the market demand curve in a perfectly competitive market? Explain.
8
Problem #2
A perfectly competitive firm has the following fixed and variable costs in the short run. The market price for the firm’s product is $140. Complete the table (a)
7
What level of output should the firm produce to maximize profits? (b)
4
Assume this firm is making a loss when it produces its 7th unit of output. What should the firm do in the short-run? (c)
4
Problem #3
How does the profit maximization condition for a monopoly differ from that for a perfectly competitive firm? How does this difference impact efficiency under each market structure?
8
Problem #4
The following table provides market share information about the soft-drink industry. (a-b)
8
Writing Style, Grammar, and APA Format.
6
Total
45
WELCOME TO
SEMINAR 5
February 4, Wed. 10-11 pm ET
MT445-02
MANAGERIAL ECONOMICS
INSTRU.
The document discusses markets for various goods and classifies them as perfectly competitive, monopolistically competitive, or monopolistic. It then analyzes the characteristics of firms in these different market structures and how they determine profit maximizing price and output. The document also provides examples of how individual firms might behave in these market contexts.
1) The document discusses supply and demand concepts through a simulation about Walmart. It explains how Walmart uses its size to lower costs from suppliers and control waste to offer lower prices to shoppers.
2) Factors that can impact supply such as input costs, productivity, and technology are reviewed. Examples are given on how these factors can increase supply if costs are lowered or productivity is improved.
3) The class will have a group quiz to discuss supply and demand questions and demonstrate their understanding. Preparation with their group is encouraged before the individual quiz.
1) The document discusses supply and demand, including the law of demand, demand curves, and factors that influence supply.
2) It explains how costs, productivity, and technology can impact a company's supply and profit margins. Lower costs and higher productivity can increase supply.
3) The document provides examples and prompts for students to think about how these concepts apply to a cupcake business, including ways to lower input costs, increase worker productivity, and implement new technologies.
PAGE 2Accounting Midterm ExamBe sure to show your w.docxalfred4lewis58146
PAGE
2
Accounting
Midterm Exam
Be sure to show your work clearly for partial credit.
The point breakdown is as follows:
Multiple choice (30 @ 2 points)
60.0 points
Problem 1
15.0 points
Problem 2
10.0 points
Problem 3
15.0 points
Total
100.0 points
Name:_____________________________
I have complied with the University’s honor code, which requires that I do my own work and not give or receive assistance on this examination. Revealing information to (or soliciting from) students is a violation of the honor code.
Signed: _____________________________
MULTIPLE CHOICE
Select the best answer to each question by circling your answer.
1. Midwest Motors manufactures automobiles. Which of the following would not be considered direct materials by the company?
A)
Sheet metal used in automobile’s body.
B)
Tires.
C)
Interior leather.
D)
CD Player.
E)
Wheel lubricant.
2.
Which of the following is a product cost?
A)
Glass in an automobile
B)
Advertising
C)
The salary of the vice president
D)
Insurance for factory building.
3.
The corporate controller's salary would be considered a(n):
A)
manufacturing cost.
B)
product cost.
C)
administrative cost.
D)
selling expense.
4.
Manufacturing overhead:
A)
can be either a variable cost or a fixed cost.
B)
includes the costs of advertising.
C)
includes all factory labor costs.
D)
includes all fixed costs.
5.
Which one of the following costs should NOT be considered an indirect cost of serving a particular customer at a Dairy Queen fast food outlet?
A)
the cost of the hamburger patty in the burger they ordered.
B)
the wages of the employee who takes the customer's order.
C)
the cost of heating and lighting the kitchen.
D)
the salary of the outlet's manager.
6.
Which of the following statements represents a similarity between financial and managerial accounting?
A)
Both are useful in providing information for external users.
B)
Both are governed by GAAP.
C)
Both draw upon an organization’s accounting system.
D)
Both rely heavily on published financial statements.
7.
The accounting records of Hill Corporation revealed the following selected costs: Sales commissions, $40,000; plant supervision, $94,000; and administrative expenses, $185,000. Hill's period costs total:
A)
$40,000.
B)
$94,000.
C)
$185,000.
D)
$225,000.
E)
$319,000.
8.
An employee accidentally overstated the year's advertising expense by $50,000. Which of the following correctly depicts the effect of this error?
A)
Cost of goods manufactured will be overstated by $50,000.
B)
Cost of goods sold will be overstated by $50,000.
C)
Both cost of goods manufactured and cost of goods sold will be overstated by $50,000.
D)
None of the above.
9.
If there is a change in the level of the number of units produced:
A)
fixed costs per unit will be the same and variable costs per unit will change.
B)
fixed and variable costs per unit will change.
C)
fixed and va.
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Exercise 9 solution
1. Exercise 9 Solution
Chapter 11 Firms in Perfectly Competitive Markets
11.1 Perfectly Competitive Markets
1) Which of the following is not a characteristic of a perfectly competitive market
structure?
A) There are a very large number of firms that are small compared to the market.
B) All firms sell identical products.
C) There are no restrictions to entry by new firms.
D) There are restrictions on exit of firms.
Answer: D
Comment: Recurring
Diff: 1 Page Ref: 368/368
Topic: Market Structures
Objective: LO1: Explain what a perfectly competitive market is and why a perfect
competitor faces a horizontal demand curve.
AACSB: Reflective Thinking
Special Feature: None
2) Which of the following is a characteristic of an oligopolistic market structure?
A) There are few dominant sellers.
B) Each firm sells a unique product.
C) It is easy for new firms to enter the industry.
D) Each firm need not react to the actions of rivals.
Answer: A
Comment: Recurring
Diff: 1 Page Ref: 368/368
Topic: Market Structures
Objective: LO1: Explain what a perfectly competitive market is and why a perfect
competitor faces a horizontal demand curve.
AACSB: Reflective Thinking
Special Feature: None
3) Perfect competition is characterized by all of the following except
A) heavy advertising by individual sellers.
B) homogeneous products.
C) sellers are price takers.
D) a horizontal demand curve for individual sellers.
Answer: A
Comment: Recurring
Diff: 1 Page Ref: 369/369
Topic: Characteristics of Perfectly Competitive Firms
Objective: LO1: Explain what a perfectly competitive market is and why a perfect
2. competitor faces a horizontal demand curve.
AACSB: Reflective Thinking
Special Feature: None
4) Which of the following is the best example of a perfectly competitive industry?
A) wheat production
B) steel production
C) electricity production
D) airplane production
Answer: A
Comment: Recurring
Diff: 2 Page Ref: 368/368
Topic: Market Structures
Objective: LO1: Explain what a perfectly competitive market is and why a perfect
competitor faces a horizontal demand curve.
AACSB: Reflective Thinking
Special Feature: None
5) Both individual buyers and sellers in perfect competition
A) can influence the market price by their own individual actions.
B) can influence the market price by joining with a few of their competitors.
C) have to take the market price as a given.
D) have the market price dictated to them by government.
Answer: C
Comment: Recurring
Diff: 1 Page Ref: 369/369
Topic: Characteristics of Perfectly Competitive Firms
Objective: LO1: Explain what a perfectly competitive market is and why a perfect
competitor faces a horizontal demand curve.
AACSB: Reflective Thinking
Special Feature: None
6) Suppose the equilibrium price in a perfectly competitive industry is $15 and a firm in
the industry charges $21. Which of the following will happen?
A) The firm's profits will increase.
B) The firm's revenue will increase.
C) The firm will not sell any output.
D) The firm will sell more output than its competitors.
Answer: C
Comment: Recurring
Diff: 1 Page Ref: 369/369
Topic: Characteristics of Perfectly Competitive Firms
Objective: LO1: Explain what a perfectly competitive market is and why a perfect
competitor faces a horizontal demand curve.
3. AACSB: Reflective Thinking
Special Feature: None
7) An individual seller in perfect competition will not sell at a price lower than the
market price because
A) demand for the product will exceed supply.
B) the seller would start a price war.
C) the seller can sell any quantity she wants at the prevailing market price.
D) demand is perfectly inelastic.
Answer: C
Comment: Recurring
Diff: 2 Page Ref: 369/369
Topic: Characteristics of Perfectly Competitive Firms
Objective: LO1: Explain what a perfectly competitive market is and why a perfect
competitor faces a horizontal demand curve.
AACSB: Reflective Thinking
Special Feature: None
11.2 How a Firm Maximizes Profit in a Perfectly Competitive Market
1) If the market price is $25, the average revenue of selling five units is
A) $5.
B) $12.50.
C) $25.
D) $125.
Answer: C
Comment: Recurring
Diff: 2 Page Ref: 371-372/371-372
Topic: Average Revenue and Marginal Revenue
Objective: LO2: Explain how a firm maximizes profits in a perfectly competitive
market.
AACSB: Reflective Thinking
Special Feature: None
2) Which of the following is not true for a firm in perfect competition?
A) Profit equals total revenue minus total cost.
B) Price equals average revenue.
C) Average revenue is greater than marginal revenue.
D) Marginal revenue equals the change in total revenue from selling one more unit.
Answer: C
Comment: Recurring
Diff: 2 Page Ref: 371-372/371-372
Topic: Average Revenue and Marginal Revenue
Objective: LO2: Explain how a firm maximizes profits in a perfectly competitive
4. market.
AACSB: Reflective Thinking
Special Feature: None
3) A perfectly competitive firm produces 3,000 units of a good at a total cost of
$36,000. The
price of each good is $10. Calculate the firm's short-run profit or loss.
A) loss of $6,000
B) profit of $6,000
C) profit of $30,000
D) There is insufficient information to answer the question.
Answer: A
Comment: Recurring
Diff: 1 Page Ref: 372-374/372-374
Topic: Profit-Maximizing Level of Output
Objective: LO2: Explain how a firm maximizes profits in a perfectly competitive
market.
AACSB: Reflective Thinking
Special Feature: None
4) If, for a perfectly competitive firm, price exceeds the marginal cost of production, the
firm should
A) increase its output.
B) reduce its output.
C) keep output constant and enjoy the above normal profit.
D) lower the price.
Answer: A
Comment: Recurring
Diff: 1 Page Ref: 372-374/372-374
Topic: Profit-Maximizing Level of Output
Objective: LO2: Explain how a firm maximizes profits in a perfectly competitive
market.
AACSB: Reflective Thinking
Special Feature: None
Figure 11-1
5. 5) Refer to Figure 11-1. What is the amount of profit if the firm produces Q2units?
A) It is equal to the vertical distance c to g.
B) It is equal to the vertical distance c to Q2.
C) It is equal to the vertical distance g to Q2.
D) It is equal to the vertical distance c to g multiplied by Q2units.
Answer: A
Comment: Recurring
Diff: 1 Page Ref: 372-374/372-374
Topic: Profit-Maximizing Level of Output
Skill: Graphing
Objective: LO2: Explain how a firm maximizes profits in a perfectly competitive
market.
AACSB: Analytic Skills
Special Feature: None
6) Refer to Figure 11-1. Suppose the firm is currently producing Q2units. What
happens if it expands output to Q3units?
A) Its profit increases by the size of the vertical distance df.
B) It makes less profit.
C) It incurs a loss.
D) It will be moving toward its profit maximizing output.
Answer: B
Comment: Recurring
Diff: 1 Page Ref: 372-374/372-374
6. Topic: Profit-Maximizing Level of Output
Skill: Graphing
Objective: LO2: Explain how a firm maximizes profits in a perfectly competitive
market.
AACSB: Analytic Skills
Special Feature: None
7) Refer to Figure 11-1. The firm breaks even at an output level of
A) Q1units.
B) Q2units.
C) Q3units.
D) Q4units.
Answer: D
Comment: Recurring
Diff: 1 Page Ref: 372-374/372-374
Topic: Profit-Maximizing Level of Output
Skill: Graphing
Objective: LO2: Explain how a firm maximizes profits in a perfectly competitive
market.
AACSB: Analytic Skills
Special Feature: None
8) Refer to Figure 11-1. What happens if the firm produces more than Q4 units?
A) Its profit increases.
B) It makes a loss.
C) Its total revenue is increasing faster than its total cost.
D) It could make a profit or a loss depending on what happens to demand.
Answer: B
Comment: Recurring
Diff: 1 Page Ref: 372-374/372-374
Topic: Profit-Maximizing Level of Output
Skill: Graphing
Objective: LO2: Explain how a firm maximizes profits in a perfectly competitive
market.
AACSB: Analytic Skills
Special Feature: None
9) Refer to Figure 11-1. Why is the total revenue curve a ray from the origin?
A) because revenue increases at an increasing rate
B) because revenue increases at a decreasing rate
7. C) because the firm can sell its product at a constant price
D) because the firm must lower its price to sell more
Answer: C
Comment: Recurring
Diff: 2 Page Ref: 372/372
Topic: Total Revenue
Skill: Graphing
Objective: LO2: Explain how a firm maximizes profits in a perfectly competitive
market.
AACSB: Analytic Skills
Special Feature: None
10) In a graph with output on the horizontal axis and total revenue on the vertical axis,
what is the shape of the total revenue curve for a perfectly competitive seller?
A) U-shaped
B) inverted U-shaped
C) a horizontal line
D) a ray from the origin
Answer: D
Comment: Recurring
Diff: 2 Page Ref: 372/372
Topic: Total Revenue
Objective: LO2: Explain how a firm maximizes profits in a perfectly competitive
market.
AACSB: Reflective Thinking
Special Feature: None
11) Assume that price is greater than average variable cost. If a perfectly competitive
seller is producing at an output where price is $11 and the marginal cost is $14.54, then
to maximize profits the firm should
A) continue producing at the current output.
B) produce a larger level of output.
C) produce a smaller level of output.
D) There is not enough information given to answer the question.
Answer: C
Comment: Recurring
Diff: 2 Page Ref: 372-374/372-374
Topic: Profit-Maximizing Level of Output
Objective: LO2: Explain how a firm maximizes profits in a perfectly competitive
market.
AACSB: Reflective Thinking
Special Feature: None
11.3 Illustrating Profit or Loss on the Cost Curve Graph
8. 1) A firm's total profit can be calculated as all of the following except
A) total revenue minus total cost.
B) average profit per unit times quantity sold.
C) (price minus average total cost) times quantity sold.
D) marginal profit times quantity sold.
Answer: D
Comment: Recurring
Diff: 2 Page Ref: 374-375/374-375
Topic: Profit
Objective: LO3: Use graphs to show a firm's profit or loss.
AACSB: Reflective Thinking
Special Feature: None
Figure 11-2
2) Refer to Figure 11-2. Suppose the prevailing price is P1 and the firm is currently
producing its loss-minimizing quantity. Identify the area that represents the loss.
A) P2deP1
B) P3cbP1
C) P3caP0
D) 0P1bQ1
Answer: B
Comment: Recurring
Diff: 2 Page Ref: 374-375/374-375
Topic: Profit and Loss
9. Skill: Graphing
Objective: LO3: Use graphs to show a firm's profit or loss.
AACSB: Analytic Skills
Special Feature: None
3) All of the following can be used to compute average profit except
A) marginal profit minus marginal cost.
B) total profit divided by quantity.
C) average revenue minus average total cost
D) price minus average total cost.
Answer: A
Diff: 2 Page Ref: 377/377
Topic: Profit
Objective: LO3: Use graphs to show a firm's profit or loss.
AACSB: Reflective Thinking
Special Feature: Don't Let This Happen to YOU!: Remember That Firms Maximize
Their Total Profits, Not Their Profits per Unit
11.4 Deciding Whether to Produce or to Shut Down in the Short Run
1) If, for a given output level, a perfectly competitive firm's price is less than its average
variable cost, the firm
A) is earning a profit.
B) should shut down.
C) should increase output.
D) should increase price.
Answer: B
Comment: Recurring
Diff: 2 Page Ref: 379-380/379-380
Topic: Shutting Down in the Short Run
Objective: LO4: Explain why firms may shut down temporarily.
AACSB: Reflective Thinking
Special Feature: None
2) When a perfectly competitive firm finds that its market price is below its minimum
average variable cost, it will sell
A) the output where marginal revenue equals marginal cost.
B) any positive output the entrepreneur decides upon because all of it can be sold.
C) nothing at all; the firm shuts down.
D) the output where average total cost equals price.
Answer: C
Comment: Recurring
Diff: 2 Page Ref: 379-380/379-380
Topic: Shutting Down in the Short Run
10. Objective: LO4: Explain why firms may shut down temporarily.
AACSB: Reflective Thinking
Special Feature: None
3) Val Alvarado, an accountant, quit his $80,000-a-year job and bought an existing
laundry from its previous owner, Ricky White. The lease has five years remaining and
requires a monthly payment of $4,000. Val's explicit cost amounts to $3,000 per month
more than his revenue. Should Val continue operating his business?
A) Val's explicit cost exceeds his total revenue. He should shut down his laundry.
B) Val should continue to run the laundry until his lease runs out.
C) If Val's marginal revenue is greater than or equal to his marginal cost, then he should
stay in business.
D) This cannot be determined without information on his revenue.
Answer: B
Diff: 2 Page Ref: 380/380
Topic: Shutting Down in the Short Run
Objective: LO4: Explain why firms may shut down temporarily.
AACSB: Reflective Thinking
Special Feature: Making the Connection: When to Close a Laundry
4) If total variable cost exceeds total revenue at all output levels, a perfectly competitive
firm
A) should produce in the short run.
B) is making short-run profits.
C) should shut down in the short run.
D) has covered its fixed cost.
Answer: C
Comment: Recurring
Diff: 2 Page Ref: 379-380/379-380
Topic: Shutting Down in the Short Run
Objective: LO4: Explain why firms may shut down temporarily.
AACSB: Reflective Thinking
Special Feature: None
5) If a firm shuts down in the short run,
A) its loss equals zero.
B) its loss equals its fixed cost.
C) is makes zero economic profit.
D) its total revenue is not large enough to cover its fixed cost.
Answer: B
Comment: Recurring
Diff: 2 Page Ref: 379-380/379-380
Topic: Shutting Down in the Short Run
Objective: LO4: Explain why firms may shut down temporarily.
11. AACSB: Reflective Thinking
Special Feature: None
11.5 "If Everyone Can Do It, You Can't Make Money at It" – The Entry and
Exit of Firms in the Long Run
1) Which of the following statements is correct?
A) Economic profit takes into account all costs involved in producing a product.
B) Accounting profit is not relevant in preparing the firm's financial statement.
C) Economic profit always exceeds accounting profit.
D) Accounting profit is the same as economic profit.
Answer: A
Comment: Recurring
Diff: 1 Page Ref: 382-383/382-383
Topic: Profit
Objective: LO5: Explain how entry and exit ensure that perfectly competitive firms
earn zero economic profit in the long run.
AACSB: Reflective Thinking
Special Feature: None
2) If a typical firm in a perfectly competitive industry is earning profits, then
A) all firms will continue to earn profits.
B) new firms will enter in the long run causing market supply to decrease, market price
to rise and profits to increase.
C) new firms will enter in the long run causing market supply to increase, market price
to fall and profits to decrease.
D) the number of firms in the industry will remain constant in the long run.
Answer: C
Comment: Recurring
Diff: 1 Page Ref: 383-384/383-384
Topic: Long-Run Equilibrium
Objective: LO5: Explain how entry and exit ensure that perfectly competitive firms
earn zero economic profit in the long run.
AACSB: Reflective Thinking
Special Feature: None
3) If, in a perfectly competitive industry, the market price facing a firm is above its
average total cost at the output where marginal revenue equals marginal cost, then
A) firms are breaking even.
B) new firms are attracted to the industry.
C) existing firms will exit the industry.
D) market supply will remain constant.
Answer: B
Comment: Recurring
12. Diff: 2 Page Ref: 383-384/383-384
Topic: Long-Run Equilibrium
Objective: LO5: Explain how entry and exit ensure that perfectly competitive firms
earn zero economic profit in the long run.
AACSB: Reflective Thinking
Special Feature: None
11.6 Perfect Competition and Efficiency
1) Which of the following describes a situation in which a good or service is produced
at the lowest possible cost?
A) productive efficiency
B) allocative efficiency
C) marginal efficiency
D) profit maximization
Answer: A
Comment: Recurring
Diff: 1 Page Ref: 389/389
Topic: Productive Efficiency
Objective: LO6: Explain how perfect competition leads to economic efficiency.
AACSB: Reflective Thinking
Special Feature: None
2) The perfectly competitive market structure benefits consumers because
A) firms do not produce goods at the lowest possible price in the long run.
B) firms are forced by competitive pressure to be as efficient as possible.
C) firms add a much smaller markup over average cost than firms in any other type of
market structure.
D) firms produce high quality goods at low prices.
Answer: B
Comment: Recurring
Diff: 2 Page Ref: 389/389
Topic: Efficiency
Objective: LO6: Explain how perfect competition leads to economic efficiency.
AACSB: Reflective Thinking
Special Feature: None
3) Which of the following describes a situation in which every good or service is
produced up to the point where the last unit provides a marginal benefit to consumers
equal to the marginal cost of producing it?
A) productive efficiency
B) allocative efficiency
C) marginal efficiency
D) profit maximization
13. Answer: B
Comment: Recurring
Diff: 1 Page Ref: 391/391
Topic: Allocative Efficiency
Objective: LO6: Explain how perfect competition leads to economic efficiency.
AACSB: Reflective Thinking
Special Feature: None
4) A perfectly competitive industry achieves allocative efficiency because
A) goods and services are produced at the lowest possible cost.
B) goods and services are produced up to the point where the last unit provides a
marginal benefit to consumers equal to the marginal cost of producing it.
C) it produces where market price equals marginal production cost.
D) firms carry production surpluses.
Answer: B
Comment: Recurring
Diff: 2 Page Ref: 391/391
Topic: Allocative Efficiency
Objective: LO6: Explain how perfect competition leads to economic efficiency.
AACSB: Reflective Thinking
Special Feature: None
5) An increase in demand for "green-certified" products will ________ a firm's
economic profit, and the increase in costs to have a product certified as "green" will
________ a firm's economic profit.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
Answer: B
Diff: 1 Page Ref: 392/392
Topic: Profit
Objective: LO6: Explain how perfect competition leads to economic efficiency.
AACSB: Analytic Skills
Special Feature: An Inside LOOK at Policy: It Isn't Easy-or Cheap-to Be Green