# Homework: Chapter 15 Homework

## Unlock all answers in this set

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not maximizing; increase
Rhonda's Turkey Farm produced 600 turkeys last week. The marginal cost was â€‹\$11 a turkeyâ€‹, average variable cost was â€‹\$30 a turkeyâ€‹, and the market price was â€‹\$33 a turkey. Rhonda isâ€‹ ______ profit, so if nothing changes she willâ€‹ ______ the number of turkeys she produces to maximize her profit this week.
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decreased; greater than the market price
U.S. Steel Lays Off 756 With a drop in the demand for steel pipe andâ€‹ tube, U.S. Steel Corporation will idle plants in Ohio and Texas and lay off 756 workers. As U.S. Steel responded to the fall inâ€‹ demand, how did its marginal costâ€‹ change? What can you say about minimum AVC in the plants thatâ€‹ closed? As U.S. Steel responded to the fall inâ€‹ demand, its marginal costâ€‹ ______. The minimum average variable cost in the plants that closed must have beenâ€‹ ______. A. â€‹increased; greater than the market price B. â€‹increased; less than the market price C. â€‹decreased; greater than the market price D. â€‹decreased; equal to average fixed cost E. â€‹decreased; less than the market price
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it produces only a tiny proportion of the total output of a particular good and buyers are well informed about the prices of other firms
In a perfectly competitiveâ€‹ market, the firm is a price taker becauseâ€‹ ______. A. each firms makes a slightly different product B. the price is dictated by the largest firm in theâ€‹ market, and if a given firm lowers its price other firms will conspire against it C. the price in the market is the price that maximizes eachâ€‹ firm's producer surplus D. it produces only a tiny proportion of the total output of a particular good and buyers are well informed about the prices of other firms E. the firms in perfect competition are interdependent and if one firm charges a lowerâ€‹ price, other firms will also lower their prices and all firms will incur an economic loss
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perfect competition
The table shows the demand schedule for Meg's Fortune Cookies. Meg's Fortune Cookies operates in a market calledâ€‹ ______. A. perfect competition B. an oligopoly C. a perfect oligopoly D. monopolistic competition E. a monopoly
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60
Meg's marginal revenue for each batch of cookies demanded is â€‹\$
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firms can choose to enter the industry but they cannot choose the price at which to sell their good
In perfectâ€‹ competition, _______. A. many firms sell the same quantity of similar goods but they charge slightly different prices B. firms can choose to enter the industry but they cannot choose the price at which to sell their good C. each firm knows its price but its competitorsâ€‹ don't D. firms already in business have advantages over firms that plan to enter the industry
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is a price taker and produces the quantity that maximizes its profit in both the short run and the long run
In perfectâ€‹ competition, each firmâ€‹ _______. A. is a price taker and produces the quantity that maximizes its profit in both the short run and the long run B. faces a perfectly inelastic demand for itsâ€‹ product, so it can select the price that maximizes its profit C. produces as much as it can and either makes a profit or incurs a loss in the short run but breaks even in the long run D. can influence the price that it charges in the short run but not in the long run
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marginal cost equals market price
In perfectâ€‹ competition, a firm maximizes its economic profit if it produces the output at whichâ€‹ _______. A. market price equals marginal revenue B. economic profit equals zero in the short run C. marginal cost equals market price D. total revenue equals total cost
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many; identical; noâ€‹ barriers; are well informed
Perfect competition is a market in which there areâ€‹ _____ firms, each sellingâ€‹ _____ product; manyâ€‹ buyers; _____ to the entry of new firms into theâ€‹ industry; no advantage to establishedâ€‹ firms; and buyers and sellersâ€‹ _____ about prices. A. â€‹few; differentiated; noâ€‹ barriers; have no information B. â€‹many; identical; noâ€‹ barriers; are well informed C. â€‹many; identical;â€‹ barriers; have no information D. â€‹few; differentiated;â€‹ barriers; are well informed
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noâ€‹ close; a barrier
Monopoly is a market in which one firm sells a good or service that hasâ€‹ _____ substitutes andâ€‹ _____ blocks the entry of new firms. A. noâ€‹ close; a barrier B. â€‹close; a barrier C. â€‹close; no barrier D. noâ€‹ close; no barrier
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â€‹large; different
Monopolistic competition is a market in which aâ€‹ _____ number of firms compete by making similar but slightlyâ€‹ _____ products. A. â€‹large; costlier B. â€‹small; cheaper C. â€‹small; different D. â€‹large; different
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small; interdependent
Oligopoly is a market in which aâ€‹ _____ number ofâ€‹ _____ firms compete. A. â€‹large; interdependent B. â€‹large; independent C. â€‹small; interdependent D. â€‹small; independent
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decreases; increases
A fall in the price of cornâ€‹ (the main chickenâ€‹ feed) _______ the marginal cost of producing chicken andâ€‹ _______ aâ€‹ farm's economic profit. A. â€‹decreases; decreases B. â€‹decreases; increases C. â€‹increases; increases D. â€‹increases; decreases
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supply of chicken wingsâ€‹ increases; falls
The good news for restaurants is that theâ€‹ _______ and the price restaurants pay for chicken wingsâ€‹ _______. A. supply of chicken wingsâ€‹ decreases; rises B. supply of chicken wingsâ€‹ increases; rises C. supply of chicken wingsâ€‹ increases; falls D. demand for chicken wingsâ€‹ decreases; falls
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2000
The graph shows theâ€‹ short-run cost curves of a toy producer. The market hasâ€‹ 1,000 identical toy producers. The market price of a toy isâ€‹ \$21. In the shortâ€‹ run, the firm produces _____ toys a week.
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makes a positive economic profit
The firm _____ in the short run.
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calculated as the sum of the quantities that firms produce when they maximize economic profit at each market price
The market supply in the short run isâ€‹ _______. A. calculated as the sum of the quantities that firms produce when they maximize economic profit at each market price B. calculated as the sum of the quantities supplied by all firms in the market at prices above their shutdown price C. illustrated as a curve that is the vertical sum of all the supply curves of the firms in the market when the number of firms remain constant D. illustrated as a curve that is the vertical sum of the marginal cost curves of all the firms in the market
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market supply and market demand determine the price and quantity bought and sold in the market
In a perfectly competitive market inâ€‹ short-run equilibrium,â€‹ _______. A. the price and quantity bought and sold in the market are determined by the shutdown point B. only demand determines the price and quantity bought and sold in the market because all firms are price takers C. only supply determines the price and quantity bought and sold in the market because the good has many substitutes D. market supply and market demand determine the price and quantity bought and sold in the market
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market price minus average totalâ€‹ cost, multiplied by the quantity produced
Inâ€‹ short-run equilibrium, each firm makes an economic profit equal toâ€‹ _______. A. marginal revenue minus average total cost B. marginal revenue minus marginalâ€‹ cost, multiplied by the quantity produced C. market price minus marginal cost D. market price minus average totalâ€‹ cost, multiplied by the quantity produced
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horizontal at the shutdown price and upward sloping at prices above the shutdown point
The market supply curve in the short run isâ€‹ _______. A. anâ€‹ upward-sloping curve that shows that as the market price rises the quantity supplied increases B. horizontal at the shutdown price and upward sloping at prices above the shutdown point C. the same as the horizontal sum of theâ€‹ firms' marginal cost curves D. the same as the average total cost curve for the entire industry
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demandâ€‹ for; increasing
California's commercial drone industry is taking off Customers are finding ever more creative ways to useâ€‹ drones, and 3E Roboticsâ€‹ Inc., America's largest producer of consumerâ€‹ drones, expects sales to soar. Explain what is happening in the market for commercial drones. How would you expect the price of a drone to change in the short run and the longâ€‹ run? How would you expect the economic profit of a drone producer such as 3D Robotics to change in the short run and in the longâ€‹ run? Theâ€‹ _______ drones isâ€‹ _______ in the short run. A. demandâ€‹ for; increasing B. the supplyâ€‹ of; increasing C. demandâ€‹ for; decreasing D. supplyâ€‹ of; decreasing
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rises; increases
In the shortâ€‹ run, the equilibrium price of a droneâ€‹ _______ and the economic profit of drone producersâ€‹ _______. A. â€‹falls; decreases B. â€‹falls; remains unchanged C. â€‹rises; remains unchanged D. â€‹rises; increases
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entry increases
In the longâ€‹ run, _____ the supply of drones.
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lower; zero economic profit
At the newâ€‹ long-run equilibrium, the price of a drone isâ€‹ _______ and drone producers makeâ€‹ _______. A. â€‹lower; an economic profit B. â€‹lower; zero economic profit C. â€‹higher; an economic profit D. â€‹unchanged; zero economic profit
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coffee growers incurred economic losses
In the shortâ€‹ run, _______. A. the supply of coffee decreased B. coffee growers exited the market C. coffee growers incurred economic losses D. the demand for coffee decreased
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the price of coffee beans rises and coffee farmers make zero economic profit
In the longâ€‹ run, _______. A. coffeeâ€‹ growers' economic losses increase B. the price of coffee beans rises and coffee farmers make zero economic profit C. the supply of coffee beans increases D. coffee growers enter the market
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to lower their price toâ€‹ compete, which resulted in economic loss
As a result of the rise of Internet retailing of recordedâ€‹ music, the small traditional record stores hadâ€‹ ___________. A. to set their price equal to minimum average total cost B. to lower their price toâ€‹ compete, which resulted in economic loss C. a decreased supply of recorded music which resulted in their prices rising above Internet prices D. to use new technology which raised their average total cost
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price fell below minimum average variable cost
Record stores decided to exit the market rather than shut down temporarily becauseâ€‹ _______. A. price fell below minimum average fixed cost B. price fell below minimum average variable cost C. they were incapable of providing music downloads D. consumers prefer to shop online
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making positive economicâ€‹ profit; an incentive to enter
If firms in a competitive industry areâ€‹ ______, then in the longâ€‹ run, firms haveâ€‹ ______ the industry. A. breakingâ€‹ even; an incentive to exit B. making zero economicâ€‹ profit; an incentive to enter C. incurring economicâ€‹ loss; no incentive to exit D. making positive economicâ€‹ profit; no incentive to enter E. making positive economicâ€‹ profit; an incentive to enter
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when each firm is making zero economic profit and no firm has an incentive to enter the industry
In a perfectly competitiveâ€‹ industry, aâ€‹ long-run equilibrium occursâ€‹ ________. A. when firms are maximizing economic profit and some of them advertise their goods B. when firms are maximizing profit and only when economic loss does not exceed total fixed cost. C. when each firm is making zero economic profit and no firm has an incentive to enter the industry D. whenever firms have no incentive to shut down
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theâ€‹ consumers' marginal benefit from the good equals the marginal cost of producing it
Perfect competition achieves efficiency if the market produces the quantity at whichâ€‹ _______. A. consumer surplus is greater than producer surplus B. producer surplus equals zero C. theâ€‹ consumers' marginal benefit from the good equals the marginal cost of producing it D. marginal benefit is greater than marginal cost
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incur an economic loss
The industry that produces portable CD players is inâ€‹ long-run equilibrium. Then the demand for portable CD players decreases permanently. As aâ€‹ result, firms will
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â€‹exit; leftward
Some firms willâ€‹ ______ theâ€‹ market, and the market supply curve will shiftâ€‹ ______. A. â€‹enter; rightward B. â€‹exit; leftward C. â€‹exit; rightward D. â€‹enter; leftward
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marginal revenue is less than average variable cost