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A measure of the responsiveness of the quantity demanded of a good to change in its price when all other influences on buyers' plans remain the same.
When the percentage change in the quantity demanded exceeds the percentage change in price.
When the quantity demanded changes by a very large percentage in response to an almost zero percentage change in price.
When the quantity supplied changes by a very large percentage in response to an almost zero percentage change in price
is a potential outcome of a price ceiling.
Suppose the current equilibrium wage rate for landscapers is $6.65 in Little Rock; $7.50 in St. Louis and $9.05 in Raleigh. An increase in the minimum wage to $7.50 per hour results in unemployment of landscapers in
New York City, which has had a rent ceiling law for more than sixty years, has many abandoned apartment buildings throughout the city. Which of the following explains this?
Landlords have no incentive to finance maintenance and remodeling of apartment buildings.
An opportunity cost incurred by a firm when it uses a factor of production for which it does not make a direct money payment.
An opportunity cost of a firm using capital that it owns-- measured as the change in the market value of capital over a given period.
the return to entrepreneurship. Normal profit is a part of a firm's opportunity cost because it is the cost of not running another firm.
When the marginal product of an additional worker exceeds the marginal product of the previous worker.
Decreasing marginal returns
affect all firms, but at different production levels.
The figure above shows some of a firm's cost curves.
Based on the figure above, curve A is the firm's
At the Punjab Bakery, two workers can decorate 14 cakes in an hour and three workers can decorate 18 cakes in an hour. The marginal product of the third worker is
4 cakes and the average product for three workers is 6 cakes.
Diseconomies of scale can occur as a result of which of the following?
In the long run, the firm ________ change the number of workers it employs and ________change the size of its plant.
Bill is an economics professor who earns $37,000 teaching but decides to leave and fulfill hisdream of catering barbecues. During his year of barbecuing he earned total revenue of $60,000.He spent $30,000 on food and supplies. He also paid his wife $10,000 to help serve food. The
A cost incurred in the production of a good or service and for which the firm does not need tomake a direct monetary payment, is referred to as ________ cost.
A firm pays $50,000 for a machine that is used in production for one year, after which it is soldfor $40,000 to another firm. The $10,000 difference is
If the average product of labor curve is rising,
i) the average variable cost curve is falling.
ii) the marginal cost curve is definitely falling.
iii) the marginal product curve has reached its maximum.
Which of the following curves are U-shaped?i) average variable cost curve
ii) average fixed cost curve
iii) average total cost curve
An insurance agent rents a building and has a three-year lease. An increase in the rent for thebuilding increases the agent's
The table above shows a total product schedule. Suppose that labor costs $20 per worker and
fixed costs are $60. The total cost of producing 80 units equals
April quit her job as an accountant at Ernst and Young, where she was paid $45,000 per year.She started her own landscaping business. She rents machines and tools for $50,000 and pays$10,000 as wages to her help. These are her only costs. April earned total revenue of $100,000
Cost curves shift if
i. technology changes.
ii. the prices of factors of production change.iii. productivity changes.
The Table gives some production and cost information for Flaming Fernando's, a restaurantthat sells Fiery Frijoles. Between what two levels of output does the marginal cost of producingFiery Frijoles first begin to rise?
The table above shows the total product schedule for Rick's Lawn Service, a yard care company.
The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each workervariable costs of production. What is the total variable cost of producing 60 bikes?
Lauren runs a chili restaurant in San Francisco. Her total revenue last year was
$110,000. The rent on her restaurant was $48,000, her labor costs were $42,000, andher materials, food and other variable costs were $20,000. Lauren could have workedas a biologist and earned $50,000 per year. An economist calculates her implicit costsas
Which of the following is true if a firm shuts down?
i. The price is less than minimum average variable cost.
ii. The firm is able to avoid an economic loss.
iii. The firm incurs a loss equal to its total variable cost.
In a perfectly competitive market, the market price is $23. At the current level of output, a firm has a marginal cost of $28. What should the firm do?
A market is ________ when a small number of firms compete.
The above figure shows three possible average total cost curves. If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC2, each produces 40 units, and the market price of the good is $20 per unit, then
The above figure shows some a firm's cost curves and its marginal revenue curve. The firm in the figure above has a total revenue equal to ________.
In the long run, existing firms exit a perfectly competitive market
If demand for a seller's product is perfectly elastic, which of the following is true?
i. The firm will sell no output if it sets the price of its product above the market price.
ii. There are many perfect substitutes for the seller's product.
iii. The firm will sell no output if it sets the price of its product below the market price.
Perfect competition is characterized by all of the following EXCEPT
The figure above shows a firm's total revenue and total cost curves.
To maximize its profit, the firm in the figure above produces ________ cans per day and ________.
A firm's marginal revenue is
A market is classified as monopolistically competitive when
many firms produce a slightly differentiated product.
In which market structure does one firm sell a good or service with no close substitutes and there is a barrier blocking the entry of new firms?
The above figure illustrates a perfectly competitive firm. If the market price is $40 a unit, to maximize its profit (or minimize its loss) the firm should
The firm's supply curve is its
The above figure illustrates a perfectly competitive firm. Curve A represents the
For a perfectly competitive corn grower in Nebraska, the marginal revenue curve is
One part of a perfectly competitive trout farm's supply curve is its
The corn market is perfectly competitive, with thousands of corn farmers. In the 2000s, the price of corn soared so that new farmers entered the corn market. Initially, entry ________ the economic profit of the initial corn farmers and in the long run the initial corn farmers ________.
Bill owns a lawn-care company in Windermere, Florida, Florida, whose cost curves are illustrated in the above figure. The market equilibrium price in this perfectly competitive market equals $32 per lawn mowed. If Bill's average total cost curve is ATC, his total economic ________ equals ________.
A firm in perfect competition is a price taker because
many other firms produce identical products.
As a perfectly competitive firm produces more and more of a good, its economic profit
The above figure shows a perfectly competitive firm. If the market price is $15 per unit, the firm
Catfish farming is a perfectly competitive industry. Catfish farmers suffered tremendous economic losses in the late 2000s. As a result,
A perfectly competitive firm is producing 50 units of output and selling at the market price of $23.The firm's average total cost is $20. What is the firm's total cost?
The above figure shows some a firm's cost curves and its marginal revenue curve.
Based on the figure above, what is the price of a can?
Suppose a single-price monopoly sells 3 units of a good at $20 per unit. If the monopoly sells 4 units, the total revenue increases to $72. What is the marginal revenue of the fourth unit?
The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot Pillows, a single-price monopoly producer of pillows stuffed with parrot feathers. When Paul maximizes his profit, he produces ________ pillows per hour.
Which of the following can be a barrier to entry?
i. ownership of a necessary input
ii. requiring a government license
iii. large diseconomies of scale
A difference between a perfectly competitive industry and a monopoly is that
Competition among rent seekers results in
The key idea behind price discrimination is to convert consumer surplus into
If a monopoly can perfectly price discriminate, then its marginal revenue curve will be
For a monopoly, marginal revenue is equal to
If a firm successfully price discriminates, it increases
i. consumer surplus.
ii. deadweight loss.
iii. economic profit.
A legal barrier is created when a firm
Price cap regulation involves
Suppose the Busy Bee Caf is the monopoly producer of hamburgers in Hugo, Oklahoma. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment. What price will the Busy Bee charge to maximize its profit?
$3.00 for a hamburger
A "buy one, get one for half price" promotion is an example of
Rent seeking is defined as
the act of obtaining special treatment by the government to create an economic profit.
A firm that is a natural monopoly
An airline company
In the above figure, a perfectly competitive market will have a price of ________ and a single-price monopoly will have a price of ________.
P2 and quantity of Q2; P1 and quantity of Q1
Under earnings-sharing regulation, if a firm's profits ________ above a certain level, they must be shared with the firm's ________.
The figure above shows a monopoly's total revenue and total cost curves.
Using the figure above, which of the following statements are correct?
i. MR = MC = $42 when 3 haircuts are produced.
ii. If the firm charges each customer the same price for a haircut, the price of a haircut is $14.
iii. The firm's economic profit is $12.
ii and iii
The social interest theory of regulation assumes that
Assume someone organizes all farms in the nation into a monopoly. Which of the following occurs?
i. Consumer surplus decreases.
ii. Economic profit increases.
iii. A deadweight loss is created.
i, ii, and iii
The U.S. Postal Service has a monopoly over first-class mail service because
The figure above shows a natural monopoly.
In the figure above, if the firm is regulated using a marginal cost pricing rule, the deadweight loss created is equal to the area of
None of the above because there is no deadweight loss created.
must lower the price for all customers if it wants to increase its sales.
A ________ monopoly sells different units of its good or service for ________.
Both Answers A and C are correct.
The above figure shows a market.
If the market in the figure above changes from perfectly competitive to a profit-maximizing single-price monopoly, the amount of the gain in producer surplus is the area ________.
The deadweight loss with perfect price discrimination is
The above figure represents the market for cable television in Oakland, Florida. Time Warner Communications (TWC) is the sole provider of cable television to the residents of this Central Florida community. If TWC is left unregulated, how many households in Oakland are served?
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