Econ 2100 Test 3

Economists normally assume that the goal of a firm is to earn: (i) profits as large as possible, even if it means reducing output. (ii) profits as large as possible, even if it means incurring a higher total cost. (iii) revenues as large as possible, even if it reduces profits.

Which of the following can be added to profit to obtain total revenue?

A firm's opportunity costs of production are equal to its

Explicit costs

A production function describes

The marginal product of labor is equal to the

Let L represent the number of workers hired by a firm, and let Q represent that firm's quantity of output. Assume two points on the firm's production function are (L = 12, Q = 122) and (L = 13, Q = 132). Then the marginal product of the 13th worker is

If a production function shows declining marginal product of an input as the quantity of the input increases, then the production function exhibits

Marginal cost tells us the

Diminishing marginal product suggests that the marginal

inputs that were fixed in the short run become variable.

Economies of scale occur when

Who is a price taker in a competitive market?

Which of the following statements regarding a competitive market is not correct?

If a firm in a competitive market doubles its number of units sold, total revenue for the firm will

Firms operating in competitive markets produce output levels where marginal revenue equals

For a firm in a perfectly competitive market, the price of the good is always

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then

The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which

If a profit-maximizing firm in a competitive market discovers that, at its current level of production, price is greater than marginal cost, it should

Suppose a firm operates in the short run at a price above its average total cost of production. In the long run the firm should expect

The short-run supply curve for a firm in a perfectly competitive market is

Competitive firms that earn a loss in the short run should

Which of the following represents the firm's long-run condition for exiting a market?

When new firms have an incentive to enter a competitive market, their entry will

If there is an increase in market demand in a perfectly competitive market, then in the short run

As a general rule, when accountants calculate profit they account for explicit costs but usually ignore

Which of the following is a characteristic of a monopoly?

Patent and copyright laws are major sources of

When a firm experiences continually declining average total costs,

In order to sell more of its product, a monopolist must

For a monopolist, marginal revenue is

The economic inefficiency of a monopolist can be measured by the

Economic welfare is generally measured by (i) profit. (ii) total surplus. (iii) the price consumers pay for the product.

Which of the following is a characteristic of monopolistic competition?

A monopolistically competitive market has characteristics that are similar to

Which of the following pairs illustrates the two extreme examples of market structures?

Imperfectly competitive firms are characterized by

Which of the following goods are not likely to be sold in monopolistically competitive markets?

Monopolistic competition is characterized by which of the following attributes? (i) free entry (ii) product differentiation (iii) many sellers

Which of the following conditions distinguishes monopolistic competition from perfect competition?

A monopolistically competitive firm chooses its

If firms in a monopolistically competitive market are earning positive profits, then

A monopolistically competitive market could be considered inefficient because

In which of the following markets are strategic interactions among firms most likely to occur?

We must be knowledgeable of how people behave in strategic situations if we are to understand

A distinguishing feature of an oligopolistic industry is the tension between

The simplest type of oligopoly is

As a group, oligopolists would always be better off if they would act collectively

When an oligopoly market reaches a Nash equilibrium,

An agreement among firms regarding price and/or production levels is called

When an oligopoly grows very large, the

Other things the same, in which case is the quantity produced the highest?

From society's standpoint, cooperation among oligopolists is

The practice of selling a product to retailers and requiring the retailers to charge a specific price for the product is called

Predatory pricing refers to

The practice of tying is used to