Microfinalpt.3

The law of diminishing marginal product (or returns) states that:

Marginal cost is the:

The shapes of which cost curves can be attributed to the law of diminishing marginal product (or returns)?

If a firms total fixed costs increase, then:

If a firms management permits its laborers to shirk and its laborers choose to do so, then:i. MPL and APL will be greater than the MPL and APL that result if laborers do not shirkii. the level of output will be less than the level of output if laborers do not shirkiii. the total labor costs required to produce a given level of output will be greater than if laborers do not shirk but total fixed costs will be unaffected

The first, second, and third workers employed by a firm add 14, 8, and 5 units to total product, respectively. Therefore, the:i. marginal product of the second worker is 22ii. marginal product of the third worker is 5iii. average product of the three workers is 9

Suppose a firms production function is Q = 0.4K0.5 L0.5. Its level of capital is fixed at 100 units, the price of labor is PL = $4 per unit, and the price of capital is PK = $8 per unit. Given this information, the firms short run production function is:

Suppose a firms production function is Q = 0.4K0.5 L0.5. Its level of capital is fixed at 100 units, the price of labor is PL = $4 per unit, and the price of capital is PK = $8 per unit. Given this information, the firms total cost function is:

A basic characteristic of the short run for both a perfectly competitive firm and a monopolist is that:

The market demand curve for a good that is produced and traded in a perfectly competitive industry is ______, while the demand curve for a single competitive firms good ______.

If a monopoly produces and sells a quantity of output (Q) for a price per unit (P) that is equal to average total cost (ATC), then:

the total revenue generated by a perfectly competitive firm: i. increases by a constant amount as the quantity of output produced and sold increasesii. increases initially, reaches a maximum, and then decreases as the quantity of output produced and sold increasesiii. appears graphically as an upward sloping straight line from the origin

A firm that is confronted with fixed costs in the short run should produce versus shut down if the total revenue generated from the sales of its output is sufficient to cover its:

Which of the following is not correct regarding the behavior of monopolies in the marketplace?

The rule of producing output to the point MR = MC in order to maximize total profit or minimize total operating losses applies:

Under which of the following situations would a perfectly competitive firm increase its per-period total profits by increasing output:

What do economies of scale, the exclusive ownership of essential raw materials used in the production process, and patents have in common?

Suppose a firm is producing a level of output such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $6 per unit and is incurring average variable costs of $7 per unit and average total costs of $8 per unit. Given this information, it may be concluded that the firm:

A perfectly competitive firms average fixed cost function is AFC = 30/Q, its average variable cost function is AVC = 6 + 0.1Q, and it marginal cost function is MC = 6 + 0.2Q. The firm optimizes by producing the level of output that maximizes profit or minimizes loss. If the market price of the good is P = $12, then the firm will:

Consider a monopolist whose total cost function is TC = 40 + 4Q + Q2 and whose marginal cost function is MC = 4 + 2Q. The demand function for the firms good is P = 120 - 0.2Q. The firm optimizes by producing the level of output that maximizes profit or minimizes loss. If the firm uses a uniform pricing strategy, then rounded to the nearest unit of output and to the nearest dollar the firm will:

A basic characteristic of the short run for both a perfectly competitive firm and a monopolist is that:

Consider a small farm that uses machinery and laborers to grow and harvest fruits or vegetables. Which of the following best describes one of its short run variable inputs?

Consider a local bakery that rents a facility at which it bakes loaves of bread using machinery (ovens, etc.) and labor. Which of the following best describes one of its fixed inputs in the short run?

The law of diminishing marginal product (or returns) states that:

All other factors held constant, if the price of one of the firm's variable inputs decreases, such as the hourly wage rate, then:

If the total variable cost incurred by producing 9 units of output is $90 and the total variable cost incurred by producing 10 units of output is $120, then:

Consider a short run production process in which MPLincreases initially as more and more labor is employed and then decreases beyond a point as the gains from specialization are exhausted. It follows that:

A firm’s total variable costs will depend upon:

Which of the following is not correct regarding a short run production process?

The shapes of which cost curves can be attributed to the law of diminishing marginal product (or returns)?

If a technological improvement occurs in a production process, then:

A fixed cost is:

Suppose a firm’s production function is Q = 4K0.5 L0.5. Its level of capital is fixed at 1 unit, the price of labor is PL = $32 per unit, and the price of capital is PK = $400 per unit. Given this information, its short run production function and average product of labor function may be determined. Which of the following is correct?i. Q = 2L0.5 ii. Q = 4L0.5 iii. APL = 2L-0.5 iv. APL = 4L-0.5

Suppose a firm’s production function is Q = 4K0.5 L0.5. Its level of capital is fixed at 1 unit, the price of labor is PL = $32 per unit, and the price of capital is PK = $400 per unit. Given this information, its total fixed cost function is:

Suppose a firm’s production function is Q = 4K0.5 L0.5. Its level of capital is fixed at 1 unit, the price of labor is PL = $32 per unit, and the price of capital is PK = $400 per unit. Given this information, its total variable cost function is:

Which of the following is not a characteristic of a perfectly competitive market?

Which of the following is characteristic of a perfectly competitive firm’s demand curve? i. it is the same as the market demand curveii. it lies above the firm’s marginal revenue curveiii. it is equal to the firm’s marginal revenue and average revenue curves iv. it is perfectly inelastic at all points

If a competitive firm’s total output increases as the quantity of labor that it employs increases, then the:

Consider a profit-maximizing firm operating in a perfectly competitive industry. If the equilibrium market price of the good falls below the minimum of the firm’s average total cost curve but is greater than the minimum of its average variable cost curve, the firm:

Consider a perfectly competitive firm that sells all units of its output for the market price. The total revenue generated by the firm: i. increases initially, reaches a maximum, and then decreases as the quantity of output produced and sold increasesii. increases by a constant amount as the quantity of output produced and sold increasesiii. appears graphically as an upward sloping straight line from the origin

The principle that a firm should produce up to the point where the marginal revenue from the sale of an extra unit of output is equal to the marginal cost of producing the extra unit is known as the:

If a firm is producing and selling a level of output that maximizes total profit, then it will be:

Suppose a perfectly competitive firm produces and sells 15 units of output per-period (e.g., daily) for the market price of $8. If its average fixed costs are $2 and its average variable costs are $3, then the firm:i. is maximizing total profit by producing and selling 15 units of outputii. earns a per-period total profit of $45iii. earns a per-period total profit of $120 iv. should close down in the short run and suffer a loss equal to $30

Under which of the following situations would a perfectly competitive firm increase its per-period total profits by increasing output:

A firm that is confronted with fixed costs in the short run should produce versus shut down if the total revenue generated from the sales of its output is sufficient to cover its:

Suppose that at 500 units of output a firm is producing such that marginal revenue is equal to marginal cost. The firm is selling its output at $6 per unit and average total cost at 500 units of output is $5. Given this information, we:

If production is occurring where price exceeds marginal cost, the purely competitive firm will:

If a competitive firm or a monopolist is producing a level of output such that P < ATC, it may be concluded that:

Suppose a firm is producing a level of output such that marginal revenue is equal to marginal cost. The firm is selling its output at a price of $7 per unit and is incurring average variable costs of $6 per unit and average total costs of $8 per unit. Given this information, it may be concluded that the firm:

A perfectly competitive firm’s average fixed cost function is AFC = 20/Q, its average variable cost function is AVC = 2 + 0.2Q, and it marginal cost function is MC = 2 + 0.4Q. The firm optimizes by producing the level of output that maximizes profit or minimizes loss. If the market price of the good is P = $6, then the firm will:

A perfectly competitive firm’s average fixed cost function is AFC = 30/Q, its average variable cost function is AVC = 6 + 0.1Q, and it marginal cost function is MC = 6 + 0.2Q. The firm optimizes by producing the level of output that maximizes profit or minimizes loss. If the market price of the good is P = $4, then the firm will:

Suppose the firms comprising the supply-side of a perfectly competitive market are earning economic profits, creating the incentive for new firms to enter the market and compete. Which of the following best describes the effect on the market resulting from the entry of new firms?

Similar to a firm operating in a perfectly competitive industry, a monopolist that chooses to produce in the short-run:i. will produce that level of output where marginal cost exceeds marginal revenue by the greatest amountii. will produce that level of output where marginal revenue exceeds marginal cost by the greatest amount iii. is always able to earn profitsiv. may incur losses

A ‘natural’ monopoly, such as a local electricity provider, is the result of:i. a firm owning or controlling a key input used in the production processii. long-run total costs declining continuously as output increasesiii. long-run average total costs declining continuously as output increasesiv. economies of scale existing over a wide range of output

A patent or copyright is a barrier to entry based on:

In contrast to a perfectly competitive firm, the demand curve faced by a monopoly is:

For a purely competitive firm _______________, and for a uniform-price monopolist _______________ :

If a profit maximizing monopolist is producing a level of output such that marginal cost is $8 and its marginal revenue is $12, it will increase its profits by:

Consider a monopolist whose total cost function is TC = 20 + 5Q + 0.5Q2 and whose marginal cost function is MC = 5 + Q. The demand function for the firm’s good is P = 80 - 0.25Q. The firm optimizes by producing the level of output that maximizes profit or minimizes loss. If the firm uses a uniform pricing strategy, then the firm will:

The price that a profit maximizing monopolist charges for its product is:

If the monopolist is producing and selling a level of output in the inelastic segment of its demand curve, it can:

Consider a monopolist that employs a uniform pricing strategy, whereby all units are sold for the same price. The price that will yield the firm the maximum total profit is: