# Homework #8 – Flashcards

question
Refer to the diagram for a purely competitive producer. The firm's short-run supply curve is:
the bcd segment and above on the MC curve.
question
Refer to the diagram. At the profit-maximizing output, total revenue will be:
0AHE.
question
Refer to the diagram. At the profit-maximizing output, the firm will realize:
an economic profit of ABGH.
question
Refer to the diagram. At the profit-maximizing output, total fixed cost is equal to:
BCFG.
question
Refer to the diagram. At the profit-maximizing output, total variable cost is equal to:
0CFE.
question
Answer the question on the basis of the following data confronting a firm: Refer to the data. This firm is selling its output in a(n):
purely competitive market.
question
Answer the question on the basis of the following data confronting a firm: Refer to the data. Assuming total fixed costs equal to zero, the firm's:
economic profit is \$16.
question
Answer the question on the basis of the following data confronting a firm: Refer to the data. If the firm's minimum average variable cost is \$10, the firm's profit-maximizing level of output would be:
3.
question
Answer the question on the basis of the following data confronting a firm: Refer to the data. At the profit-maximizing output, the firm's total revenue is:
\$48.
question
Refer to the diagram for a purely competitive producer. The firm will produce at a loss at all prices:
between P2 and P3.
question
Refer to the diagram for a purely competitive producer. If product price is P3:
economic profits will be zero.
question
Refer to the diagram for a purely competitive producer. The lowest price at which the firm should produce (as opposed to shutting down) is:
P2.
question
Refer to the diagram. To maximize profit or minimize losses, this firm will produce:
E units at price A.
question
Refer to the diagram, which pertains to a purely competitive firm. Curve A represents:
total revenue only.
question
Refer to the diagram, which pertains to a purely competitive firm. Curve C represents:
Average revenue and marginal revenue.
question
As the firm in the diagram expands from plant size #1 to plant size #3, it experiences:
economies of scale.
question
As the firm in the diagram expands from plant size #3 to plant size #5, it experiences:
diseconomies of scale.
question
The diagram shows the short-run average total cost curves for five different plant sizes of a firm. If in the long run the firm should produce output 0x, it should do it with a plant of size:
#2.
question
A purely competitive firm finds that the market price for its product is \$20.00. It has a fixed cost of \$100.00 and a variable cost of \$17.50 per unit for the first 50 units and then \$25.00 per unit for all successive units.
a. yes \$17.50 b. no \$21.25 c. \$17.50 \$25.00 d. yes no e. 50
question
If an industry's long-run average total cost curve has an extended range of constant returns to scale, this implies that:
both relatively small and relatively large firms can be viable in the industry.
question
Diseconomies of scale arise primarily because:
of the difficulties involved in managing and coordinating a large business enterprise.
question
DASH Airlines is considering the addition of a flight from Red Cloud to David City. The total cost of the flight would be \$1,100, of which \$800 are fixed costs already incurred. Expected revenues from the flight are \$600. DASH should:
add this flight because marginal revenue exceeds marginal costs and total revenue exceeds total variable cost.
question
Suppose that at 500 units of output marginal revenue is equal to marginal cost. The firm is selling its output at \$5 per unit and average total cost at 500 units of output is \$6. On the basis of this information, we:
cannot determine whether the firm should produce or shut down in the short run.
question
Which of the following is not a basic characteristic of pure competition?
Considerable nonprice competition.
question
Which of the following is characteristic of a purely competitive seller's demand curve?
Price and marginal revenue are equal at all levels of output.
question
Which of the following is not a valid generalization concerning the relationship between price and costs for a purely competitive seller in the short run?
Price must be at least equal to average total cost.
question
A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its:
total variable costs.
question
To economists, the main difference between the short run and the long run is that:
in the long run all resources are variable, while in the short run at least one resource is fixed.
question
Which of the following represents a long-run adjustment?
Unable to meet foreign competition, a U.S. watch manufacturer sells one of its branch plants.
question
In contrast to American firms, Japanese firms frequently make lifetime employment commitments to their workers and agree not to lay them off when product demand is weak. Other things being equal, we would expect Japanese firms to:
continue to produce in the short run at lower prices than would American firms.
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## Unlock all answers in this set

question
Refer to the diagram for a purely competitive producer. The firm's short-run supply curve is:
the bcd segment and above on the MC curve.
question
Refer to the diagram. At the profit-maximizing output, total revenue will be:
0AHE.
question
Refer to the diagram. At the profit-maximizing output, the firm will realize:
an economic profit of ABGH.
question
Refer to the diagram. At the profit-maximizing output, total fixed cost is equal to:
BCFG.
question
Refer to the diagram. At the profit-maximizing output, total variable cost is equal to:
0CFE.
question
Answer the question on the basis of the following data confronting a firm: Refer to the data. This firm is selling its output in a(n):
purely competitive market.
question
Answer the question on the basis of the following data confronting a firm: Refer to the data. Assuming total fixed costs equal to zero, the firm's:
economic profit is \$16.
question
Answer the question on the basis of the following data confronting a firm: Refer to the data. If the firm's minimum average variable cost is \$10, the firm's profit-maximizing level of output would be:
3.
question
Answer the question on the basis of the following data confronting a firm: Refer to the data. At the profit-maximizing output, the firm's total revenue is:
\$48.
question
Refer to the diagram for a purely competitive producer. The firm will produce at a loss at all prices:
between P2 and P3.
question
Refer to the diagram for a purely competitive producer. If product price is P3:
economic profits will be zero.
question
Refer to the diagram for a purely competitive producer. The lowest price at which the firm should produce (as opposed to shutting down) is:
P2.
question
Refer to the diagram. To maximize profit or minimize losses, this firm will produce:
E units at price A.
question
Refer to the diagram, which pertains to a purely competitive firm. Curve A represents:
total revenue only.
question
Refer to the diagram, which pertains to a purely competitive firm. Curve C represents:
Average revenue and marginal revenue.
question
As the firm in the diagram expands from plant size #1 to plant size #3, it experiences:
economies of scale.
question
As the firm in the diagram expands from plant size #3 to plant size #5, it experiences:
diseconomies of scale.
question
The diagram shows the short-run average total cost curves for five different plant sizes of a firm. If in the long run the firm should produce output 0x, it should do it with a plant of size:
#2.
question
A purely competitive firm finds that the market price for its product is \$20.00. It has a fixed cost of \$100.00 and a variable cost of \$17.50 per unit for the first 50 units and then \$25.00 per unit for all successive units.
a. yes \$17.50 b. no \$21.25 c. \$17.50 \$25.00 d. yes no e. 50
question
If an industry's long-run average total cost curve has an extended range of constant returns to scale, this implies that:
both relatively small and relatively large firms can be viable in the industry.
question
Diseconomies of scale arise primarily because:
of the difficulties involved in managing and coordinating a large business enterprise.
question
DASH Airlines is considering the addition of a flight from Red Cloud to David City. The total cost of the flight would be \$1,100, of which \$800 are fixed costs already incurred. Expected revenues from the flight are \$600. DASH should:
add this flight because marginal revenue exceeds marginal costs and total revenue exceeds total variable cost.
question
Suppose that at 500 units of output marginal revenue is equal to marginal cost. The firm is selling its output at \$5 per unit and average total cost at 500 units of output is \$6. On the basis of this information, we:
cannot determine whether the firm should produce or shut down in the short run.
question
Which of the following is not a basic characteristic of pure competition?
Considerable nonprice competition.
question
Which of the following is characteristic of a purely competitive seller's demand curve?
Price and marginal revenue are equal at all levels of output.
question
Which of the following is not a valid generalization concerning the relationship between price and costs for a purely competitive seller in the short run?
Price must be at least equal to average total cost.
question
A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its:
total variable costs.
question
To economists, the main difference between the short run and the long run is that: