Econ Exam 3

question

The solution to the consumer maximum problem given in class is to find the point in which the budget line is just tangent to one indifference curve

answer

True

question

If you were to graph typical cost curves, the marginal cost curve would cross the average variable cost curve at the lowest point of the average variable cost curve

answer

True

question

If you were to graph typical cost curves, the marginal cost curve would cross the average fixed cost curve at the lowest point of the average fixed cost curve

answer

False

question

A good example of economies of scale is when the farms merge, reducing their need for expensive capital equipment

answer

True

question

For a graph showing a perfectly competitive firm earning a loss but should stay open, at the profit maximizing quantity, the marginal cost will be: (Drawing the graph might be helpful)

answer

greater than average variable cost

question

For a graph showing a firm in perfect competition earning a loss but should shut down, at the profit maximum quantity, the marginal cost will be:(Drawing the graph might be helpful)

answer

none of the above

question

A consumer with a fixed income will maximize utility when each good is purchased in amounts such that the:

answer

Marginal utility per dollar spent is the same for all goods

question

For a perfectly competitive firm the demand curve facing the firm will be

answer

a horizontal line on the graph

question

The reason the marginal cost curve eventually increases as output increases for the typical firm is because

answer

the law of diminishing return

question

In the real world which industry comes closest to perfect competition

answer

agriculture

question

In perfect competition

answer

new firms are free to enter

question

A consumer is making purchases of products (j) and (k) such that the marginal utility of product (j) is 40 and the marginal utility of product (k) is 100. The price of product (j) is $1 and the price of (k) is $10. The equal marginal rule suggest that this consumer shoulf

answer

Increase consumption of product (k) and decrease the consumption of product (j)

question

For a perfectly competitive business, price equals

answer

average revenue
marginal revenue
total revenue divided by output

question

If the average variable cost of production for a firm is decreasing, then it follows that

answer

marginal cost must be below average variable cost

question

A business firm should produce

answer

the number of units of the product in which the marginal cost of producing is equal to the marginal revenue

question

A business is earning profits if, at the profit maximum quantity :

answer

price > average total cost

question

If a business is earning losses at the profit maximizing quantity, it should still stay open if:

answer

price > average variable cost

question

if production is occurring where marginal cost exceeds price, the perfectly competitive firm will:

answer

fail to maximize profit and resources will be over allocated to the product

question

if production is occurring where marginal cost is less than the price, the perfectly competitive firm will:

answer

fail to maximize profits and resources will be under allocated to the product

question

The following situation occurs for a firm: marginal cost equals average total cost at 120 units, marginal revenue at 100 units, and average variable cost at 80 units. At the profit maximizing quantity average total cost is $25, average variable cost is $15, average fixed cost is $10, and the price is $30. Calculate profit

answer

$600

question

In the previous question would the firm stay open or shut down?

answer

stay open because price > average variable cost

question

For a perfectly competitive business, total revenue:

answer

is price multiplied times quantity sold.
increase by a constant absolute amount as output expands.
graphs as a straight up sloping line from the origin.

1 of 22

question

The solution to the consumer maximum problem given in class is to find the point in which the budget line is just tangent to one indifference curve

answer

True

question

If you were to graph typical cost curves, the marginal cost curve would cross the average variable cost curve at the lowest point of the average variable cost curve

answer

True

question

If you were to graph typical cost curves, the marginal cost curve would cross the average fixed cost curve at the lowest point of the average fixed cost curve

answer

False

question

A good example of economies of scale is when the farms merge, reducing their need for expensive capital equipment

answer

True

question

For a graph showing a perfectly competitive firm earning a loss but should stay open, at the profit maximizing quantity, the marginal cost will be: (Drawing the graph might be helpful)

answer

greater than average variable cost

question

For a graph showing a firm in perfect competition earning a loss but should shut down, at the profit maximum quantity, the marginal cost will be:(Drawing the graph might be helpful)

answer

none of the above

question

A consumer with a fixed income will maximize utility when each good is purchased in amounts such that the:

answer

Marginal utility per dollar spent is the same for all goods

question

For a perfectly competitive firm the demand curve facing the firm will be

answer

a horizontal line on the graph

question

The reason the marginal cost curve eventually increases as output increases for the typical firm is because

answer

the law of diminishing return

question

In the real world which industry comes closest to perfect competition

answer

agriculture

question

In perfect competition

answer

new firms are free to enter

question

answer

Increase consumption of product (k) and decrease the consumption of product (j)

question

For a perfectly competitive business, price equals

answer

average revenue
marginal revenue
total revenue divided by output

question

If the average variable cost of production for a firm is decreasing, then it follows that

answer

marginal cost must be below average variable cost

question

A business firm should produce

answer

the number of units of the product in which the marginal cost of producing is equal to the marginal revenue

question

A business is earning profits if, at the profit maximum quantity :

answer

price > average total cost

question

If a business is earning losses at the profit maximizing quantity, it should still stay open if:

answer

price > average variable cost

question

if production is occurring where marginal cost exceeds price, the perfectly competitive firm will:

answer

fail to maximize profit and resources will be over allocated to the product

question

if production is occurring where marginal cost is less than the price, the perfectly competitive firm will:

answer

fail to maximize profits and resources will be under allocated to the product

question

answer

$600

question

In the previous question would the firm stay open or shut down?

answer

stay open because price > average variable cost

question

For a perfectly competitive business, total revenue:

answer

is price multiplied times quantity sold.
increase by a constant absolute amount as output expands.
graphs as a straight up sloping line from the origin.

Continue to order Get a quote

Econ Exam 3

Recent Posts

Recent Comments

Calculate the price of your order

Our guarantees

Money-back guarantee

Zero-plagiarism guarantee

Free-revision policy

Privacy policy

Fair-cooperation guarantee