question

Any cost that remains the same when a firm changes its output is called a:

answer

Fixed Cost

question

Explicit plus implicit costs, including a normal profit would equal:

answer

Economic Costs.

question

Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4,000 units of its output at $300 per unit, its accounting profits were:

answer

$200,000 and its economic profits were zero.

question

Suppose that a business incurred implicit costs of $500,000 and explicit costs of $5 million in a specific year. If the firm sold 100,000 units of its output at $50 per unit, its accounting:

answer

profits were zero and its economic losses were $500,000.

question

The long run is characterized by:

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zero fixed resources.

question

The profits that an entrepreneur earns when economic profits are zero is called:

answer

normal profit.

question

The short run is characterized by:

answer

at least one fixed resource.

question

Which of the following is true?

answer

Accounting Profits are greater than Economic Profits.

question

output / total cost 0 $24 1 33 2 41 3 48 4 54 5 61 6 69 Refer to the above data. The total variable cost of producing 5 units is:

answer

$37

question

number or workers units of output 0 0 1 40 2 90 3 126 4 150 5 165 6 180 Refer to the above data. Average product is at a maximum when:

answer

two workers are hired

question

number or workers units of output 0 0 1 40 2 90 3 126 4 150 5 165 6 180 Refer to the above data. Diminishing marginal returns become evident with the addition of the:

answer

third worker

question

number or workers units of output 0 0 1 40 2 90 3 126 4 150 5 165 6 180 Refer to the above data. The marginal product of the third worker is:

answer

36 units of output.

question

Agriculture is an example of what type of industry

answer

Pure Competition

question

A purely competitive firm:

answer

can only earn a normal profit in the long-run.

question

If the long-run supply curve is sloping downward, this means it is a(n):

answer

decreasing-cost industry.

question

The demand curve for a purely competitive firm is:

answer

perfectly elastic.

question

The part of the MC curve above the AVC (or shut-down point) represents:

answer

the short-run supply curve, under pure competition.

question

The Railroad is able to offer their service for a low rate because they serve a very, very large number of customers. This is an example of

answer

economies of scale.

question

An unregulated pure monopolist will maximize profits by producing that output at which:

answer

MR = MC.

question

when marginal product lies above average product, average product is rising.

answer

when marginal product lies above average product, average product is rising.

question

Output Total Cost 0 $50 1 100 2 140 3 175 4 200 refer to the chart below. The average total cost of producing 4 units of output is:

answer

50

question

Barriers to entering an industry:

answer

are the basis for monopoly.

question

Comparing a pure monopoly and a purely competitive firm with identical costs, we would find that the pure monopolist:

answer

produces a lower output at a higher price than the pure competitor.

question

If a monopolist engages in price discrimination, it will:

answer

charge customers different prices for products, unrelated to cost differences.

question

If a regulatory commission forces a natural monopoly to charge a price equal to its average total cost:

answer

the monopolist will realize a normal profit, economic profits will be zero.

question

Producing where P = ATC, causes a monopolist to:

answer

earn zero economic profits or a normal profi

question

Pure monopolists may obtain economic profits in the long run because:

answer

of barriers to entry.

question

The pure monopolist's demand curve is:

answer

the same as the industry demand curve.

question

Which of the following is a characteristic of pure monopoly that allows the firm to earn economic profits in the long-run?

answer

barriers to entry

question

Which of the following is characteristic of a pure monopolist's demand curve?

answer

It is the same as the industry demand curve.

question

Which of the following is correct?

answer

A purely competitive firm is a "price taker," while a monopolist is a "price maker."

question

If the four-firm concentration ratio for industry X is 70

answer

the industry is oligopoly.

question

The economic inefficiencies (wastes) of monopolistic competition may be offset by the fact that:

answer

consumers have a number of variations of the product and more products from which to choose.

question

The kinked-demand curve of an oligopolist is based on the assumption that:

answer

competitors will follow a price cut but ignore a price increase.

question

The restaurant, legal assistance, and clothing industries are each illustrations of:

answer

monopolistic competition.

question

Which of the following is a characteristic of monopolistic competition?

answer

relatively large numbers of sellers relatively easy entry to the industry

question

Which of the following is the best example of oligopoly?

answer

automobile manufacturing

Microeconomics unit 2 quizzes – Flashcards

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