ECON 111 Module 3 - Custom Scholars
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# ECON 111 Module 3

question
The short run is a period of time in which
the quantities of some resources the firm uses are fixed
question
Economists define the short run as a period of time so short that
at least one factor of production cannot be varied
question
An example of a variable resource in the short run is
an employee
question
An example of a short−run fixed factor of production is
capital equipment
question
The long run is a time frame in which
the quantities of all factors of production can be varied.
question
A period of time in which the quantity of all factors of production used by a firm can be varied is called the
long run
question
The marginal product of labor is equal to the
increase in the total product that results from hiring one more worker.
question
The marginal product of labor is the increase in total product from a
one unit increase in the quantity of​ labor, while holding the quantity of capital constant.
question
At that amount of output where diminishing marginal returns first sets​ in,
marginal product will begin to decline
question
​"Diminishing marginal​ returns" refer to a situation in which the
marginal product of the last worker hired is less than the marginal product of the previous worker hired.
question
The law of diminishing returns states that as
a firm uses more of a variable​ input, given the quantity of fixed​ inputs, the marginal product of the variable input eventually diminishes.
question
A​ firm's total cost ​(TC​) equals the sum of its fixed cost plus its
variable cost
question
Total fixed cost is the sum of all
costs of the​ firm's fixed inputs.
question
A​ firm's total fixed cost ​(TFC​) is defined as a cost
that does not change as output changes
question
Marginal cost is equal to
the change in total cost divided by the change in quantity
question
Marginal cost is the increase in total​ ________ that results from a one−unit increase in​ ________.
cost, output
question
As output​ increases, average fixed cost
always decreases
question
Average total costs are total costs divided by
total output
question
Which of the following is a correct formula for determining accounting profit?
Total Revenue - Fixed Cost - Variable Cost
question
Which type of cost is factored into economic profit but is not factored into accounting profit?
opportunity cost
question
Total cost is the sum of
fixed costs and variable costs
question
Which of the following is a fixed cost?
rent
question
What should a business do in the short run if its total revenue is less than its total costs?
Shut down only if its total revenue is less than its variable costs.
question
Holly made \$4000 a month in her previous career. She recently opened a boutique. The boutique generates \$4000 more per month in revenue than the total of her fixed and variables costs. What can we say about Holly's business?
Holly's business is earning a normal profit.
question
What can we learn from the story of the Luddites?
While there are benefits from technological progress, it takes time before they take effect.
question
Who were the original Luddites?
cloth workers
question
The Luddites would likely be in support of the current technological push of computers.
False
question
What was the response to the Luddites?
Destroying machines became punishable by death.
question
What is the typical argument in favor of technological change?
Technology makes everybody better off in the long run.
question
What was the aim of the Luddites?
To ban the machines that threatened their jobs
question
By the 1990s, a day's wages got you _____ of light.
20,000 hours
question
What enabled Thomas Edison to invent the electric lamp?
Thomas Edison had a financial support system of patents, corporations, and banks.
question
How does the economy grow?
The economy grows as there are better, faster, and cheaper ways of doing things.
question
In Ancient Babylonian times, a day's wages got you _____ of light. After kerosene was invented, this amount changed to _______.
10 minutes; 5 hours
question
Why does Bill Nordhaus want to understand the prices of light over time?
He believes light is a way to track human and economic progress in a wide variety of forms.
question
What invention in the 1850s revolutionized the light industry?
kerosene
question
Why is having a cheaper source of light important to economic progress?
It allows people to spend their wages on other things, such as food, clothing, travel, and entertainment.
question
A​ firm's long−run average cost curve
-shows the lowest attainable average total cost of producing any level of output when capital and labor are variable.
-is U−shaped.
-tells the firm which plant size to use and which quantity of labor to use to minimize the cost of producing any level of output.
question
Economies to scale refer to
the range of output over which the
long−run average cost falls as output increases.
question
In the short run
no firm experiences economies of scale
question
When long−run average costs decrease as output​ increases, there are
economies of scale
question
When a firm experiences economies of​ scale, its​ ________ cost curve slopes​ ________.
long-run average, downward
question
A firm experiences​ ________ when its​ ________ downward at larger outputs.
economies of​ scale; long−run average cost curve slopes
question
Economies of scale refer to the range of output over which
the long−run average cost falls as output increases.
question
Electric utility companies have built larger and larger electric generating stations​ and, as a​ result, the long−run average cost of producing each kilowatt hour decreased. This is an example of
economies of scale
question
​"Diseconomies of​ scale" occur in
in the long run, not the short run
question
When long−run average cost increases as output increases there are
diseconomies of scale
question
When long−run average costs increase as output​ increases, there are
diseconomies of scale
question
Diseconomies of scale definitely means that as the firm increases its​ output, its
long−run average total cost increases.
question
One reason for diseconomies of scale is​ that, at very large​ scales, management systems can become
increasingly complex and inefficient.
question
A common source of diseconomies of scale is the
growing complexity of management and organizational structure.
question
When long−run average cost remains constant as output increases there are constant
returns to scale
question
Farmer Seth has a perfectly flat long−run average total cost curve over the range of output from​ 10,000 bushels of wheat to​ 100,000 bushels of wheat.​ Hence, over this range of​ output, Farmer Seth definitely experiences
constant returns to scale
question
The LRAC curve generally is
U-shaped
question
When a firm is experiencing economies of​ scale,
the LRAC curve slopes downward.
question
A market structure in which many firms are selling an identical product is called
perfect competition
question
A market with the characteristics of many firms selling an identical​ product, many​ buyers, and no restrictions on entry or exit to the market is
a perfectly competitive market
question
The market for wheat is an example of
perfectly competitive market
question
Under​ ________, there are many firms selling slightly different products.
monopolistic competition
question
Which market type has characteristics as​ follows: large number of​ firms, differentiated​ product?
monopolistic
question
A market structure in which a small number of firms compete is called
oligopoly
question
Under​ oligopoly, there are​ ________ firms selling products that are​ ________.
a few, either identical or different
question
The air travel​ market, which is dominated by a few large​ firms, is an example of
an oligopolistic market.
question
A market structure in which one firm produces a good or service that has no close substitutes is called
monopoly
question
Which market type has characteristics as​ follows: one​ firm, good or service produced has no close​ substitutes, barriers to entry prevent new firms from entering into the​ industry?
monopoly
question
The largest share of the U.S. private economy is
competitive or monopolistically competitive.
question
In perfect​ competition, there are​ _______.
many​ firms, each selling an identical product
question
Firms in perfectly competitive industries have a​ ________ individual demand curve when the price is on the vertical axis and the quantity is on the horizontal axis. The shape of the curve is result of the firm being a​ ________.
horizontal, price taker
question
In perfect​ competition, each individual firm faces​ ________ demand curve.
a perfectly elastic
question
In perfect​ competition, the price of the product is determined where the market
supply curve and market demand curve intersect.
question
Tammy sells woolen hats in a perfectly competitive market. The marginal cost of producing 1 hat is​ \$24. The marginal cost of producing a second hat is​ \$26 and the marginal cost of producing a third hat is​ \$28. The market price of a hat is​ \$26. To maximize​ profit, Tammy produces​ ________ a day.
2 hats
question
A perfectly competitive firm shuts down if the price of its product is
less than its minimum average variable cost.
1 of 72
question
The short run is a period of time in which
the quantities of some resources the firm uses are fixed
question
Economists define the short run as a period of time so short that
at least one factor of production cannot be varied
question
An example of a variable resource in the short run is
an employee
question
An example of a short−run fixed factor of production is
capital equipment
question
The long run is a time frame in which
the quantities of all factors of production can be varied.
question
A period of time in which the quantity of all factors of production used by a firm can be varied is called the
long run
question
The marginal product of labor is equal to the
increase in the total product that results from hiring one more worker.
question
The marginal product of labor is the increase in total product from a
one unit increase in the quantity of​ labor, while holding the quantity of capital constant.
question
At that amount of output where diminishing marginal returns first sets​ in,
marginal product will begin to decline
question
​"Diminishing marginal​ returns" refer to a situation in which the
marginal product of the last worker hired is less than the marginal product of the previous worker hired.
question
The law of diminishing returns states that as
a firm uses more of a variable​ input, given the quantity of fixed​ inputs, the marginal product of the variable input eventually diminishes.
question
A​ firm's total cost ​(TC​) equals the sum of its fixed cost plus its
variable cost
question
Total fixed cost is the sum of all
costs of the​ firm's fixed inputs.
question
A​ firm's total fixed cost ​(TFC​) is defined as a cost
that does not change as output changes
question
Marginal cost is equal to
the change in total cost divided by the change in quantity
question
Marginal cost is the increase in total​ ________ that results from a one−unit increase in​ ________.
cost, output
question
As output​ increases, average fixed cost
always decreases
question
Average total costs are total costs divided by
total output
question
Which of the following is a correct formula for determining accounting profit?
Total Revenue - Fixed Cost - Variable Cost
question
Which type of cost is factored into economic profit but is not factored into accounting profit?
opportunity cost
question
Total cost is the sum of
fixed costs and variable costs
question
Which of the following is a fixed cost?
rent
question
What should a business do in the short run if its total revenue is less than its total costs?
Shut down only if its total revenue is less than its variable costs.
question
Holly made \$4000 a month in her previous career. She recently opened a boutique. The boutique generates \$4000 more per month in revenue than the total of her fixed and variables costs. What can we say about Holly's business?
Holly's business is earning a normal profit.
question
What can we learn from the story of the Luddites?
While there are benefits from technological progress, it takes time before they take effect.
question
Who were the original Luddites?
cloth workers
question
The Luddites would likely be in support of the current technological push of computers.
False
question
What was the response to the Luddites?
Destroying machines became punishable by death.
question
What is the typical argument in favor of technological change?
Technology makes everybody better off in the long run.
question
What was the aim of the Luddites?
To ban the machines that threatened their jobs
question
By the 1990s, a day's wages got you _____ of light.
20,000 hours
question
What enabled Thomas Edison to invent the electric lamp?
Thomas Edison had a financial support system of patents, corporations, and banks.
question
How does the economy grow?
The economy grows as there are better, faster, and cheaper ways of doing things.
question
In Ancient Babylonian times, a day's wages got you _____ of light. After kerosene was invented, this amount changed to _______.
10 minutes; 5 hours
question
Why does Bill Nordhaus want to understand the prices of light over time?
He believes light is a way to track human and economic progress in a wide variety of forms.
question
What invention in the 1850s revolutionized the light industry?
kerosene
question
Why is having a cheaper source of light important to economic progress?
It allows people to spend their wages on other things, such as food, clothing, travel, and entertainment.
question
A​ firm's long−run average cost curve
-shows the lowest attainable average total cost of producing any level of output when capital and labor are variable.
-is U−shaped.
-tells the firm which plant size to use and which quantity of labor to use to minimize the cost of producing any level of output.
question
Economies to scale refer to
the range of output over which the
long−run average cost falls as output increases.
question
In the short run
no firm experiences economies of scale
question
When long−run average costs decrease as output​ increases, there are
economies of scale
question
When a firm experiences economies of​ scale, its​ ________ cost curve slopes​ ________.
long-run average, downward
question
A firm experiences​ ________ when its​ ________ downward at larger outputs.
economies of​ scale; long−run average cost curve slopes
question
Economies of scale refer to the range of output over which
the long−run average cost falls as output increases.
question
Electric utility companies have built larger and larger electric generating stations​ and, as a​ result, the long−run average cost of producing each kilowatt hour decreased. This is an example of
economies of scale
question
​"Diseconomies of​ scale" occur in
in the long run, not the short run
question
When long−run average cost increases as output increases there are
diseconomies of scale
question
When long−run average costs increase as output​ increases, there are
diseconomies of scale
question
Diseconomies of scale definitely means that as the firm increases its​ output, its
long−run average total cost increases.
question
One reason for diseconomies of scale is​ that, at very large​ scales, management systems can become
increasingly complex and inefficient.
question
A common source of diseconomies of scale is the
growing complexity of management and organizational structure.
question
When long−run average cost remains constant as output increases there are constant
returns to scale
question
Farmer Seth has a perfectly flat long−run average total cost curve over the range of output from​ 10,000 bushels of wheat to​ 100,000 bushels of wheat.​ Hence, over this range of​ output, Farmer Seth definitely experiences
constant returns to scale
question
The LRAC curve generally is
U-shaped
question
When a firm is experiencing economies of​ scale,
the LRAC curve slopes downward.
question
A market structure in which many firms are selling an identical product is called
perfect competition
question
A market with the characteristics of many firms selling an identical​ product, many​ buyers, and no restrictions on entry or exit to the market is
a perfectly competitive market
question
The market for wheat is an example of
perfectly competitive market
question
Under​ ________, there are many firms selling slightly different products.
monopolistic competition
question
Which market type has characteristics as​ follows: large number of​ firms, differentiated​ product?
monopolistic
question
A market structure in which a small number of firms compete is called
oligopoly
question
Under​ oligopoly, there are​ ________ firms selling products that are​ ________.
a few, either identical or different
question
The air travel​ market, which is dominated by a few large​ firms, is an example of
an oligopolistic market.
question
A market structure in which one firm produces a good or service that has no close substitutes is called
monopoly
question
Which market type has characteristics as​ follows: one​ firm, good or service produced has no close​ substitutes, barriers to entry prevent new firms from entering into the​ industry?
monopoly
question
The largest share of the U.S. private economy is
competitive or monopolistically competitive.
question
In perfect​ competition, there are​ _______.
many​ firms, each selling an identical product
question
Firms in perfectly competitive industries have a​ ________ individual demand curve when the price is on the vertical axis and the quantity is on the horizontal axis. The shape of the curve is result of the firm being a​ ________.
horizontal, price taker
question
In perfect​ competition, each individual firm faces​ ________ demand curve.
a perfectly elastic
question
In perfect​ competition, the price of the product is determined where the market
supply curve and market demand curve intersect.
question
Tammy sells woolen hats in a perfectly competitive market. The marginal cost of producing 1 hat is​ \$24. The marginal cost of producing a second hat is​ \$26 and the marginal cost of producing a third hat is​ \$28. The market price of a hat is​ \$26. To maximize​ profit, Tammy produces​ ________ a day.
2 hats
question
A perfectly competitive firm shuts down if the price of its product is
less than its minimum average variable cost.

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