Final Test Review for Econ 102

question

Monopoly

answer

a firm that is the sole seller of a product without any close substitutes

question

Barriers to entry

answer

business practices or conditions that make it difficult for new firms to enter the market.

question

Barriers to entry 3 sources

answer

Monopoly resources, government regulation, and the production process.

question

What happens when a monopoly increases output by one unit?

answer

price of the good falls and revenue for all units decreases

question

LRATC curve

answer

lies along the lowest points of the SRATC curves because the firm has more flexibility in the LR to deal with changes of production

question

economies of scale

answer

the property whereby long-run average total cost falls as the quantity of output increases

question

diseconomies of scale

answer

the property whereby long-run average total cost rises as the quantity of output increases

question

constant returns to scale

answer

the property whereby long-run average total cost stays the same as the quantity of output changes

question

P=AR=MR

answer

competitive firm

question

competitive maximize profit

answer

the quantity where MR=MC

question

Because Profit=TR-TC, profit can only be zero when

answer

TR=TC

question

Since TR=PxQ; TC=ATCxQ, then

answer

P=ATC

question

Why do competitive firms stay in business if they make zero profit?

answer

1)profit=TR-TC 2)to an economist, TC includes all of the opportunity costs of the firm 3)when a form is earning zero economic profit, this must mean that the firm's revenues are compensating the firm's owners for their opportunity costs.

question

What is a natural monopoly

answer

a monopoly that arises because a single firm can supply a good or service for an entire market at a smaller cost than could two or more.

question

what is monopolistic competition

answer

a market structure in which many firms sell products that are similar but not identical

question

what is oligopoly

answer

s market structure in which only a few sellers offer similar or identical products

question

Suppose that Ellen opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%.Refer to Scenario 13-5. Ellen’s explicit cost of capital is

answer

$12,000

question

what is Curve A

answer

average fixed cost

question

Tom quit his $65,000 a year corporate lawyer job to open up his own law practice. In Tom's first year in business his total revenue equaled $150,000. Tom's explicit cost during the year totaled $85,000. What is Tom’s economic profit for his first year in business?

answer

question

answer

$2,000

question

The competitive firm's long-run supply curve is that portion of the marginal cost curve that does above average

answer

total cost

question

Jose's restaurant operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC = $20, AVC = $15, and the price per unit is $10. In this situation,

answer

Shut down immediatly

question

Suppose that a firm in a competitive market is currently maximizing its short-run profit at an output of 50 units. If the current price is $9, the marginal cost of the 50th unit is $9, and the average total cost of producing 50 units is $4, what is the firm's profit?

answer

$250

question

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is correct?

(i)Marginal revenue equals $3.(ii)Average revenue equals $100.(iii)Total revenue equals $900.

answer

(i) and (iii) only

question

Profit-maximizing firms in a competitive market produce an output level where

answer

marginal cost equals marginal revenue

question

When fixed costs are ignored because they are irrelevant to a business's production decision, stye are called

answer

sunk costs

question

In the long-run a firm will exit a competitive industry if

answer

average total cost exceeds the price

question

A travel company knows that there are two types of travelers: business travelers and leisure travelers. For a particular travel, there are 100 business travelers who will pay $500 for a plane ticket while there are 150 leisure travelers who will pay $200 for a ticket. There are 250 seats available on the plane. Suppose the cost to the travel company of providing the flight is $35,000, which includes the cost of the pilots, flight attendants, fuel, etc.Refer to Scenario 1. How much profit will the airline earn if it engages in price discrimination?

answer

$45,000

question

What is the monopoly price and quantity?

answer

price=F; quantity=A

question

what is the socially efficient price and quantity?

answer

price=G; quantity=B

question

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

answer

marginal cost equals price while a monopolist produces where price exceeds marginal cost.

1 of 31

question

Monopoly

answer

a firm that is the sole seller of a product without any close substitutes

question

Barriers to entry

answer

business practices or conditions that make it difficult for new firms to enter the market.

question

Barriers to entry 3 sources

answer

Monopoly resources, government regulation, and the production process.

question

What happens when a monopoly increases output by one unit?

answer

price of the good falls and revenue for all units decreases

question

LRATC curve

answer

lies along the lowest points of the SRATC curves because the firm has more flexibility in the LR to deal with changes of production

question

economies of scale

answer

the property whereby long-run average total cost falls as the quantity of output increases

question

diseconomies of scale

answer

the property whereby long-run average total cost rises as the quantity of output increases

question

constant returns to scale

answer

the property whereby long-run average total cost stays the same as the quantity of output changes

question

P=AR=MR

answer

competitive firm

question

competitive maximize profit

answer

the quantity where MR=MC

question

Because Profit=TR-TC, profit can only be zero when

answer

TR=TC

question

Since TR=PxQ; TC=ATCxQ, then

answer

P=ATC

question

Why do competitive firms stay in business if they make zero profit?

answer

question

What is a natural monopoly

answer

a monopoly that arises because a single firm can supply a good or service for an entire market at a smaller cost than could two or more.

question

what is monopolistic competition

answer

a market structure in which many firms sell products that are similar but not identical

question

what is oligopoly

answer

s market structure in which only a few sellers offer similar or identical products

question

answer

$12,000

question

what is Curve A

answer

average fixed cost

question

answer

question

answer

$2,000

question

The competitive firm's long-run supply curve is that portion of the marginal cost curve that does above average

answer

total cost

question

Jose's restaurant operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC = $20, AVC = $15, and the price per unit is $10. In this situation,

answer

Shut down immediatly

question

answer

$250

question

Suppose that a firm operating in perfectly competitive market sells 300 units of output at a price of $3 each. Which of the following statements is correct?

(i)Marginal revenue equals $3.(ii)Average revenue equals $100.(iii)Total revenue equals $900.

answer

(i) and (iii) only

question

Profit-maximizing firms in a competitive market produce an output level where

answer

marginal cost equals marginal revenue

question

When fixed costs are ignored because they are irrelevant to a business's production decision, stye are called

answer

sunk costs

question

In the long-run a firm will exit a competitive industry if

answer

average total cost exceeds the price

question

answer

$45,000

question

What is the monopoly price and quantity?

answer

price=F; quantity=A

question

what is the socially efficient price and quantity?

answer

price=G; quantity=B

question

One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where

answer

marginal cost equals price while a monopolist produces where price exceeds marginal cost.

Continue to order Get a quote

Final Test Review for Econ 102

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