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As a firm attempts to expand production, it must says to attract additional help. This leads to run supply curve slope increase; higher; upward. 8. The entry and exit of firms ensure that the in the long run than in the short run. Market supply curve; elastic the wage it costs, making the long- is much more 9. Holding all else constant, an increase in the market demand for a product in a competitive market would cause: the marginal revenue (MR.) curve of the firms to increase. 10. The market for watches is perfectly competitive and is currently in equilibrium.
If watches become more popular among college students, in the worth run, firms will experience economic profits: but in the long run, firms will enter the market, bringing economic profits back down to zero. 11. In a competitive market, if one firm raises their price relative to the other firms in the market, consumers are willing to go to another firm because: the products are similar, which makes them substitutes. 12. A firm characterized as a price taker: has no control over the price it pays, or receives, in the market. 13.
Which characteristic of competitive markets is mainly responsible for ensuring that prices will be kept low? Easy entry into and exit from the market. 4. Chuck Diesel Burger is a food truck in Houston, Texas. Imagine that Chuck Diesel Burger’s minimum average total cost (TACT) is $3. 75 and its minimum average variable cost (PVC) is 52. 50; assume there are no barriers to entry into or exit from the food-truck market. Chuck Diesel Burger will make a positive economic profit if the price is equal to: $4. 00. 15. Assuming a firm’s costs are split between variable costs and fixed costs, once variable costs are covered, 16.
Jim and Lisa own a dog-grooming business in Champlain, New York, called JELL Groomers. There are many buyers and many sellers in the dog-grooming reverie market. JELL Groomers experiences normal cost curves with the marginal cost (MAC) curve crossing average variable cost (PVC) at $ 14 and average total cost (TACT) at $22. JELL Groomers will make positive economic profits if: the market price is above $22. 17. Its easy to determine if a firm is making long-run production decisions by looking at its cost structure. This is because in the long run, a firm does not have any: fixed costs. 18.
Costs that have been incurred as a result of past decisions are known as: sunk costs. 19. Charlie’s Chorus is a perfectly competitive firm that sells desserts in Houston, Texas. Charlie’s Chorus currently is taking in $40,000 in revenues, has SSL 5,000 in explicit costs, and $25,000 in implicit costs. Holding all else constant, the price in this market will: stay where it is. 20. When firms exit a market, the causing individual firms’ profits to short-run market supply; left; increase. Curve shifts 21 . Which of the following lists the three main characteristics of a competitive market? Any buyers and sellers, similar products, easy entry into the market 22. Total revenue minus total cost equals: profit. 23. A firm participating in a competitive market with costs described in the able below would always shut down: if the price is equal to $2. 24. When revenue is insufficient to cover cost, the firm suffers a loss. 25. Sunk costs: are costs that have been incurred as a result of past decisions. 26. According to the figure below, this firm would shut down in the long run if: the price fell below $5. 7. One difference between implicit costs and explicit costs is that: explicit costs are included in accounting profits, whereas implicit costs are not. 28. Holding all else constant, an increase in the price Of hot dogs would cause: the marginal revenue (MR.) curve in the market for hot dog buns to crease. 29. Marginal revenue is: the change in total revenue when the firm produces additional units. 30. According to the figure below, if the firm is maximizing profits, profit is represented by the area: 31 .
Firms will always stay in the market if: the price they charge is greater than their minimum average variable cost (PVC). 32. A firm’s willingness to supply their product in the short run is represented on a graph by: the part of the marginal cost (MAC) curve above minimum average variable cost (PVC). 33. According to the figure below, a firm would be suffering a loss but still be producing if the price is: low $5 but above $4. 34. A firm’s willingness to supply their product in the long run is represented the part of the marginal cost (MAC) curve above minimum average total cost (TACT). 5. RSI easy to determine if a firm is making long-run production decisions by 36. If Insole’s Knick-Knacks is a perfectly competitive firm and is making zero economic profits, Insole’s Knick-Knacks will stay in the market. 37. If Firm A is making zero economic profits, Firm A is breaking even when opportunity cost is taken into consideration. Chapter 10 1 . One argument against patent and copyright laws is that they: emit exposure that can benefit companies and individuals. 2. In instances when having a single firm in the market makes sense, govern meets require licenses. O minimize negative externalities. 3. The following table represents the costs of production and market demand faced by a monopolist. As production increases, the price consumers are willing to pay for the good: decreases. 4. At high price levels, demand tends to be relative to the output effect. Elastic; small and the price effect is 5. According to the figure below, this profit-maximizing firm’s total profit is equal to: -$160 6. Christopher Campground is the only campground located in Abilene, Texas. Christopher Campground’s demand curve is: the market demand curve. 7.
If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30, the monopolist should: increase production and lower the price to maximize profits. 8. According to the accompanying figure, the deadweight loss associated with this profit-maximizing monopoly is represented by areas: 9. Deadweight loss results in a monopoly because: some consumers who would benefit from a competitive market lose out. 10. A privately owned firm that is regulated by the government is very similar to a firm that the government owns because: neither have a profit motive. 11.
Patents and copyright law: assure inventors that no one else will sell their idea. 12. Barriers to entry: restrict the entry of new firms into the market. 13. The following table represents costs and production for a monopolist. The profit-maximizing quantity for this firm is: 3. 14. The price effect refers to: how lower prices affect revenue. 15. At high price levels, demand tends to be 16. Because the demand curve for a monopolist is downward sloping, he monopolist has many price-output combinations. 17. Which of the following is a characteristic of a monopoly but not a characteristic of a competitive market?
Price ; Marginal Cost 18. According to the accompanying figure, consumer surplus associated with a profit-maximizing monopoly is equal to: $300. 19. Rent seeking: occurs when resources are used to secure monopoly rights the rough the political process. 20. Which pricing rule generates the greatest welfare for society? Marginal cost pricing rule 21 . Raising capital to compete against an entrenched monopolist: is very difficult. 2. Economies of scale is an example of: a natural barrier. 23. According to the accompanying figure, the profit-maximizing price and quantity are: $25 and 100. 4. According to the accompanying figure, the revenue received by the profit, maximizing monopolist is: $900. 25. According to the accompanying figure, the revenue received by the profit maximizing monopolist in this market is represented by: 26. According to the figure below, the profit-maximizing price and quantity are: $26 and 20, respectively. 27. When a monopolist lowers a price from $80 to $70, the quantity that the rim is able to sell increases from 1 00 to 150. The change in revenue associated with the price effect is equal to: 5-1000 28.
Monopolies result in a(n) choice to consumers. Inefficient; less level of output and provide 29. According to the figure below, if this firm is profit maximizing, society would experience $525 Chapter 8 in deadweight loss. 1 . Economists consider both explicit and implicit costs when measuring economic profit. The reason they consider implicit costs is that: in order to be truly profitable, a business must cover its opportunity costs as well as its out- of-pocket expenses. 2. Ralph owns a small pizza restaurant, where he works full time in the kitchen.
His total revenue last year Was $100,000, and his rent was $3,000 per month. He pays his one employee $2,000 per month, and the cost of ingredients and overhead averages 5500 per month. Additionally, Ralph could earn $35,000 per year as the manager of a competing pizza restaurant nearby. His total accounting profit for the year was: 534,000. 3. A firm’s inputs are also known as its: factors of production. 4. If all workers are able to specialize and become more productive as more labor is hired, the amount of total output produced: increases at an increasing rate. 5.
When the average variable cost curve is upward sloping, what must be true about the marginal cost curve? The marginal cost curve is above the average variable cost curve. 6. Audrey owns a horse ranch. Her total costs are $550,000 per year, and her fixed costs are $205,000 per year. This means that her variable costs are: $345,000. 7. When the average total cost curve is downward sloping, what must be true The marginal cost curve is below the average total cost curve. 8. Which is the best example of discomposes of scale? A parking garage. 9. Darrell owns a furniture store.