Micro: Chapter 7 – Flashcards

A _____________ competitive firm's average-revenue schedule is also known as its demand schedule.

In purely competitive markets, individual firms do not not exert control over _____________.

Product ______________ distinguishes ______________ competition from all other market structures.

Market models are distinguished based upon difference in:

In a purely competitive industry, at profit-maximization or loss-minimization, marginal __________________ is equal to __________________.

A purely competitive firm's demand schedule is also known as its:

Which of the following market models is/are considered to be imperfect?

Which of the following describes an industry that would best fit the monopolistically competitive market structure?

When an industry is purely competitive, price can be substituted for marginal revenue in the MR = MC rule because

Consider the statement: "Even if a firm is losing money, it may be better to stay in business in the short run." This statement is ___________________. The firm should produce in the short run so long as the price _____________________________.

In pure competition, the demand for the product of a single firm is perfectly:

Under which market model are the conditions of entry the most difficult?

Which is a feature of a purely competitive market?

A single firm in pure competition in the short run has

The production of agricultural products such as wheat or corn would best be described by which market model?

Pure competition

Pure monopoly

Monopolistic competition

Oligopoly

Under which of these market classifications does each of the following most accurately fit? a. A supermarket in a small town b. The steel industry c. A Kansas wheat farm d. A large commercial bank e. The automobile industry

The steel and automobile industries would be examples of which market model?

Which characteristic would best be associated with pure competition?

Price is constant or "given" to the individual firm selling in a purely competitive market because:

Under which market model are the conditions of entry into the market easiest?

In pure competition, the marginal revenue of a firm always equals:

The market model with the largest number of firms is:

Why do the demand, marginal-revenue, and average-revenue curves coincide?

True or false: "Marginal revenue is the change in total revenue associated with additional units of output."

Which is true under conditions of pure competition?

Which market model has the least number of firms?

If the demand curve facing a firm is perfectly elastic, then:

The retail trade for clothing would be an example of which market model?

sam owns a firm that produces tomatoes in a purely competitive market. The firm's demand curve is:

A purely competitive firm does not try to sell more of its product by lowering its price below the market price because:

Which is a reason why there is no advertising by individual firms under pure competition?

In which two market models would advertising be used most often?

There is no control over price by firms in:

If a firm is a price taker, then the demand curve for the firm's product is:

In a purely competitive industry, each firm:

A reduction in business property taxes. MC AVC AFC ATC

An increase in the hourly wages of production workers. MC AVC AFC ATC

A decrease in the price of electricity. MC AVC AFC ATC

An increase in transportation costs. MC AVC AFC ATC

The AFC curve slopes continuously downward because

The MC curve eventually slopes upward because

If total fixed cost increases,

If total variable cost falls at each level of output,

Long-run average total cost falls as the firm realizes ____________________ and later rises when the firm experiences ______________. The minimum efficient scale is the ____________________________________________________. If the long-run average total cost drops quickly to its minimum point and then rises abruptly, the industry will likely be ___________________________________________________.

formulas

Classify each of the following as either a fixed or variable cost:

Marginal product first rises, then declines, and ultimately becomes negative because the returns to the

The law of diminishing returns influences short-run costs because

Fixed costs and variable costs are distinct in the

Determine whether the following events are short-run or long-run adjustments.

Explicit costs are payments the firm makes for

A plant is

A firm is

an industry is

A vertically integrated firm contains plants involved in

A horizontally integrated firm contains plants involved in

A conglomerate integrated firm contains plants involved in

Which of the following is not likely to be a horizontally integrated firm?

The explicit costs of going to college include

Gomez runs a small pottery firm. He hires one helper at $12,000 per year, pays annual rent of $5000 for his shop, and spends $20,000 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $4000 per year if alternatively invested. He estimates his entrepreneurial talents are worth $3000 per year (input cost for organizing resources). He has been offered $15,000 per year to work as a potter for a competitor. Total annual revenue from pottery sales is $72,000. Calculate the accounting profit and the economic profit for Gomez's pottery firm.

Gomez runs a small pottery firm. He hires one helper at $11,500 per year, pays annual rent of $7,000 for his shop, and spends $22,500 per year on materials. He has $40,000 of his own funds invested in equipment (pottery wheels, kilns, and so forth) that could earn him $6,500 per year if alternatively invested. He has been offered $22,000 per year to work as a potter for a competitor. He estimates his entrepreneurial talents are worth $4,500 per year (input cost for organizing resources). Total annual revenue from pottery sales is $80,000. Calculate the accounting profit and the economic profit for Gomez's pottery firm.