Econ 201 Final

question

Specialization usually leads to

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A great division of labor

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The supply of a product does not depend on

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Consumers' tastes

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A major advantage for a corporate form of business organization is its

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Limited liability for stockholders

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If demand is relatively elastic, a change in price in either direction causes

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A change in total revenue in the opposite direction

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If a price ceiling below the equilibrium price is imposed in a market

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The quantity demanded will exceed the quantity supplied

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If an increase in output results in a decrease in average total cost, the corresponding marginal cost is

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Less than average total cost

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When economies of scale are outweighed by diseconomies, the

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long-run average-cost curve rises

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A firm can realize an economic profit only when

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Average total cost is less than average revenue

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For a firm, at any level of output less than the most profitable one, an increase in output

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Adds more to total revenue than to total cost

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For a firm in perfect competition, it is always true that

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Average revenue equals marginal revenue equals price

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The demand curve facing a pure monopolist is always

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The same as the industry's demand curve

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A monopoly

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Is a price setter

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A firm will shut down in the short run if

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Total revenue is less than total variable cost

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If there was a decrease in demand for a product produced in a perfectly competitive industry in long equilibrium, we would predict that

answer

Firms will make losses and the number of firms in this industry will shrink

question

When a firm charges different prices to different segments of a market for the same good, without incurring corresponding differences in the costs of serving each market segment, it is engaging in

answer

Price discrimination

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Price discrimination means

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A good is sold at different prices not reflecting differences in cost

question

Assuming identical production functions and cost curves, the long-run equilibrium of a monopolistically competitive firm, as compared with a perfectly competitive firm, is such that, for the former, price is

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Higher and output is smaller

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In a monopolistically competitive industry, a firm in the long run equilibrium will be operating where price is

answer

Greater than marginal cost but equal to average total cost

question

In comparison with perfectly competitive industries, production in oligopolistic industries, such as the aluminum and automobile industries, is characterized by

answer

Economies of scale and lower unit costs

question

In the kinked demand curve theory of oligopoly discussed in class, if firm A raises its price, firm B will

answer

not change its price

question

In a perfectly competitive input market, a firm finds that the marginal cost of a factor is

answer

equal to its price

question

A change in demand for a given factor of production will not occur if

answer

The price of that factor falls

question

A firm that is perfectly competitive in the output market finds that the supply curve of a specific resource is

answer

horizantal

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The doctrine that asserts the shares of national output are distributed to the factors of production according to the values that each contributes is known as

answer

marginal- productivity theory

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All other things being equal, a monopsonistic firm, as compared with a perfectly competitive firm

answer

pays a lower wage and hires less labor

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Economic rent is zero when supply is

answer

perfectly elastic

question

The income-effect is evidenced by a labor-supply curve, or segment thereof, that

answer

is negatively sloped

question

A typical labor-market supply and demand model indicates that, the greater the increase in the minimum wage rate

answer

the greater the increase in unemployment

question

As output increases, economies of scale are reflected by

answer

downward sloping long run average cost

question

A monopolist's per unit profit is equal to

answer

price minus average total cost

question

The Lorenz curve vertical axis measures what

answer

cumulative percentage of household income

question

In monopoly, the market demand curve is the firm's

answer

demand curve

question

The vertical distance between total cost (TC) and total variable cost (TVC) at each quantity on a graph

answer

is constant

question

As output increases, diseconomies of scale are reflected by

answer

upward sloping long run average cost

question

Accounting profit equals

answer

economic profit plus implicit costs

question

For an indifference curve for food and clothing, the marginal rate of substitution of food for clothing

answer

decreases as the quantity of clothing increases

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If marginal product is decreasing, then we know that

answer

marginal product may be either greater than or less than average product

question

Marginal resource cost (MRC) is the

answer

additional cost generated by employing an additional unit of resource

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The income effect predicts that a reduction in the wage will result in

answer

More work because they can afford to buy less leisure

question

If economic rent in a particular resource market is zero then we know that the market

answer

supply curve for the resource must be horizantal

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An increase in supply will lower price unless

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demand is perfectly elastic

question

If consumers have budgeted a fixed amount of money to buy a certain product, and within a certain range of prices will spend neither more nor less that this amount on the product, then their demand curve in this price range would be designated as

answer

unitary elastic

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Suppose that the average product of labor increases as more workers are hired. Which of the following must be true

answer

Marginal product is greater than average product

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If marginal cost decreases (shits downward) a profit maximizing monopolist will

answer

reduce price and increase quantity

question

If all the returns to a resource are in the form of economic rent

answer

the market supply curve for that resource must be vertical

question

An effective price ceiling imposed on a product results in

answer

quantity demanded exceeding quantity supplied since price is below the equilibrium price

question

In economics, capital is defined as

answer

man made goods used to produce other goods such as machines

question

If a consumer moves upward along a given indifference curve, his or her satisfaction

answer

remains constant

question

Every point along a horizontal demand curve has a price elasticity of demand of

answer

infinity

question

When cost goes up substantially as output increases we would expect the price elasticity of supply to be

answer

relatively inelastic and so be less than one

question

According to class the reason that we draw production possibilities frontiers as bowed out from the origin is because

answer

resources are specialized

1 of 51

question

Specialization usually leads to

answer

A great division of labor

question

The supply of a product does not depend on

answer

Consumers' tastes

question

A major advantage for a corporate form of business organization is its

answer

Limited liability for stockholders

question

If demand is relatively elastic, a change in price in either direction causes

answer

A change in total revenue in the opposite direction

question

If a price ceiling below the equilibrium price is imposed in a market

answer

The quantity demanded will exceed the quantity supplied

question

If an increase in output results in a decrease in average total cost, the corresponding marginal cost is

answer

Less than average total cost

question

When economies of scale are outweighed by diseconomies, the

answer

long-run average-cost curve rises

question

A firm can realize an economic profit only when

answer

Average total cost is less than average revenue

question

For a firm, at any level of output less than the most profitable one, an increase in output

answer

Adds more to total revenue than to total cost

question

For a firm in perfect competition, it is always true that

answer

Average revenue equals marginal revenue equals price

question

The demand curve facing a pure monopolist is always

answer

The same as the industry's demand curve

question

A monopoly

answer

Is a price setter

question

A firm will shut down in the short run if

answer

Total revenue is less than total variable cost

question

If there was a decrease in demand for a product produced in a perfectly competitive industry in long equilibrium, we would predict that

answer

Firms will make losses and the number of firms in this industry will shrink

question

When a firm charges different prices to different segments of a market for the same good, without incurring corresponding differences in the costs of serving each market segment, it is engaging in

answer

Price discrimination

question

Price discrimination means

answer

A good is sold at different prices not reflecting differences in cost

question

answer

Higher and output is smaller

question

In a monopolistically competitive industry, a firm in the long run equilibrium will be operating where price is

answer

Greater than marginal cost but equal to average total cost

question

In comparison with perfectly competitive industries, production in oligopolistic industries, such as the aluminum and automobile industries, is characterized by

answer

Economies of scale and lower unit costs

question

In the kinked demand curve theory of oligopoly discussed in class, if firm A raises its price, firm B will

answer

not change its price

question

In a perfectly competitive input market, a firm finds that the marginal cost of a factor is

answer

equal to its price

question

A change in demand for a given factor of production will not occur if

answer

The price of that factor falls

question

A firm that is perfectly competitive in the output market finds that the supply curve of a specific resource is

answer

horizantal

question

The doctrine that asserts the shares of national output are distributed to the factors of production according to the values that each contributes is known as

answer

marginal- productivity theory

question

All other things being equal, a monopsonistic firm, as compared with a perfectly competitive firm

answer

pays a lower wage and hires less labor

question

Economic rent is zero when supply is

answer

perfectly elastic

question

The income-effect is evidenced by a labor-supply curve, or segment thereof, that

answer

is negatively sloped

question

A typical labor-market supply and demand model indicates that, the greater the increase in the minimum wage rate

answer

the greater the increase in unemployment

question

As output increases, economies of scale are reflected by

answer

downward sloping long run average cost

question

A monopolist's per unit profit is equal to

answer

price minus average total cost

question

The Lorenz curve vertical axis measures what

answer

cumulative percentage of household income

question

In monopoly, the market demand curve is the firm's

answer

demand curve

question

The vertical distance between total cost (TC) and total variable cost (TVC) at each quantity on a graph

answer

is constant

question

As output increases, diseconomies of scale are reflected by

answer

upward sloping long run average cost

question

Accounting profit equals

answer

economic profit plus implicit costs

question

For an indifference curve for food and clothing, the marginal rate of substitution of food for clothing

answer

decreases as the quantity of clothing increases

question

If marginal product is decreasing, then we know that

answer

marginal product may be either greater than or less than average product

question

Marginal resource cost (MRC) is the

answer

additional cost generated by employing an additional unit of resource

question

The income effect predicts that a reduction in the wage will result in

answer

More work because they can afford to buy less leisure

question

If economic rent in a particular resource market is zero then we know that the market

answer

supply curve for the resource must be horizantal

question

An increase in supply will lower price unless

answer

demand is perfectly elastic

question

answer

unitary elastic

question

Suppose that the average product of labor increases as more workers are hired. Which of the following must be true

answer

Marginal product is greater than average product

question

If marginal cost decreases (shits downward) a profit maximizing monopolist will

answer

reduce price and increase quantity

question

If all the returns to a resource are in the form of economic rent

answer

the market supply curve for that resource must be vertical

question

An effective price ceiling imposed on a product results in

answer

quantity demanded exceeding quantity supplied since price is below the equilibrium price

question

In economics, capital is defined as

answer

man made goods used to produce other goods such as machines

question

If a consumer moves upward along a given indifference curve, his or her satisfaction

answer

remains constant

question

Every point along a horizontal demand curve has a price elasticity of demand of

answer

infinity

question

When cost goes up substantially as output increases we would expect the price elasticity of supply to be

answer

relatively inelastic and so be less than one

question

According to class the reason that we draw production possibilities frontiers as bowed out from the origin is because

answer

resources are specialized

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Econ 201 Final

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