The supply curve of a price-taker firm in the short run is the:
portion of the firm's marginal cost curve that lies above average variable cost curve
If rice is an inferior good:
an increase in income will cause the demand curve for rice to shift to the left
If a price-taker industry is in long-run equilibrium, the market price in the industry will be just sufficient to cover the firm's average: _______
total costs
What price should a competitive price-searcher firm charge with the cost and demand conditions depicted in figure 10-9 if it wants to maximize its profit?
$24
Suppose a typical firm in a particular industry is making positive economic profits. These economic profits:
signal owners of factors of production to move resources into this industry
If fixed costs are $200,000 and variable costs are $30 per unit over the relevant range of output, when 10,000 units are produced, the average total cost will be:
$50
An oligopolistic market:
has a small number of rival firms, and each is large relative to the size of that market
For a price increase from $10 to $11, the price elasticity of the demand curve depicted in figure 7-8 is:
approximately equal to -2
The average total cost and marginal costs of a firm producing in a price-taker industry are depicted in figure 9-8. If the current market price of the firm's product is $3, what output should this firm produce per day?
15
In price-taker markers, individual firms have no control over price. Therefore, the firm's marginal revenue curve is:
constant at the market price of the product
In the short run, if AVC equals $45, ATC equal $50, and output equals 100, the total fixed costs will equal:
500
Which of the following is true of entrepreneurship?
Entrepreneurial discovery is an important source of economic growth and higher living standards.
If you paid $100 for a truckload of cabbage on Monday, how much should you be willing to sell it for on Friday the day before it spoils?
whatever you can get for it
Figure 10-8 present the demand, marginal revenue, and cost curves for a typical firm in a market. This figure illustrates:
long-run equilibrium in a competitive price-searcher market
A downward-sloping portion of a long-run average total cost curve is the result of:
economies of scale
A 15 percent increase in the price of beef reduces the quantity of beef consumed by 30 percent. Thus, the demand for beef is _____, and total consumer expenditure will ______ as a result of the price increase.
elastic; decrease
If a market is in long-run equilibrium, which of the following conditions will be present in a competitive price-taker market but absent from a competitive price-searcher market?
P = MC
If marginal revenue exceeds marginal cost, a price-taker firm should:
expand output
Other things constant, if wheat production is a price-taker industry, a decrease in the price of fertilizer used to grow wheat will:
increase the supply of wheat
What is the ATC at an output level of four units?
$1500
When would sunk costs be irrelevant for current decision making?
Sunk costs are always irrelevant when making current decisions
Why will the long-run market supply curve for most products slope upward to the right?
Resource prices will rise and push costs upward as the output of the industry expands.
Mr. Jones always busy gasoline at the corner station with his credit card. Now a new station (that does not accept credit cards) is built on the other corner and offers the same quality of gasoline for $.05 less per gallon. Is Jones irrational if he conti
Not necessarily; he may think the ease and convenience of using his credit card is worth the extra cost
Which of the following provides the best explanation of diseconomies of scale?
large management structures may be bureaucratic and inefficient
When the price of a product rise, the increase in quantity supplied will generally be greater in the long run than the short run because
over time, new firms will enter the industry and old firms will expand their operations in response to price increase
When economic losses are present in a market, firms will tend to
exit from the market
Larger firms will often have lower minimum per-unit cost than smaller firms because
large-scale output allows greater specialization for both labor and machines in the production process
Suppose sharply higher coffee prices lead to an increase in demand for tea. As tea prices increase, tea producers experience short-run economic profits. If the tea industry is a price-taker industry and if sufficient time is allowed for the market to adju
increase, and economic profits to disappear
If the government levies a $1 excise tax on each unit of a good sold, what will happen to the producer's cost curve?
The average total cost and marginal cost curves will shift upward by the amount of the tax.
In the long-run, neither competitive price taker nor competitive price searcher will be able to earn economic profits because:
competition will force prices down to the level of per-unit production costs
You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to bu
yours would be positive and your roommate's would be negative
The strategy underlying price discrimination is:
to increase total revenue by charging higher to those with the most inelastic demand for the product and lower prices to those with the most elastic demand
According to figure 8-2, at what output would a properly constructer marginal cost curve cross the ATC curve?
20
A profit-maximizing price searcher will expand output to the point where:
marginal revenue equals marginal cost