1 2 pts As production increases, Group of answer choices average fixed cost will fall. average fixed cost will increase. average fixed cost will stay constant. Flag this Question Question 2 2 pts If a solar panel manufacturer wants to look at its total costs of production in the short run, which of the following would provide a useful starting point? Group of answer choices Divide the variable costs of production by the quantity of output. Divide total costs into two categories: fixed costs that can't be changed in the short run and variable costs that can be. Divide the total costs of production by the quantity of output. Divide total costs into two categories: variable costs that can't be changed in the short run and fixed costs that can be. Flag this Question Question 3 2 pts A business produces 10 units of output. Its average variable cost (AVC) = $25, average fixed cost (AFC) = $5, and marginal cost (MC) = $30. The firm's average total cost (ATC) is ________. Group of answer choices $250 $30 $300 Flag this Question Question 4 2 pts What happens to marginal cost if a business's average total cost is decreasing? Group of answer choices Marginal cost must be lower than average total cost. Marginal cost must be higher than average total cost. Marginal cost must be lower than total cost. Marginal cost must be higher than total cost. Flag this Question Question 5 2 pts When the Long Run Average Cost (LRAC) curve is horizontal, it implies that there are ________. Group of answer choices diseconomies of scale constant returns to scale economies of scale Flag this Question Question 6 2 pts How do economists distinguish between the long run and the short run? Group of answer choices There are diminishing returns in the short run, but increasing returns in the long run. Resources have higher costs in the short run than in the long run. In the short run, at least one resource is fixed; in the long run, all resources are variable. In the long run, all resources are variable; in the short run, all resources are fixed. Flag this Question Question 7 2 pts Economies of scale may arise from which of the following activities? Group of answer choices Government economic subsidies protect firms from competition to avoid losses. Doubling promotional expenses to expand sales more than proportionately. Having a smaller retail space can expand sales more than proportionately. Flag this Question Question 8 2 pts If a firm is a price taker, then the demand curve for a single firm is Group of answer choices perfectly elastic. the same slope as market demand. perfectly inelastic. Flag this Question Question 9 2 pts If a perfectly competitive firm is producing output at a point where marginal revenue is equal to marginal cost, then it should Group of answer choices stick with that level of production in order to maximize profits. decrease output in order to maximize profits. increase output in order to maximize profits. Flag this Question Question 10 2 pts The long-term result of entry and exit in a perfectly competitive market is that all firms end up selling at the price level determined by the lowest point on the Group of answer choices marginal cost curve industry supply curve. average variable cost curve. average cost curve. Flag this Question Question 11 2 pts A profit maximizing firm in a competitive industry should ________ when marginal costs are falling. Group of answer choices reduce prices raise output until marginal costs are equal to marginal revenue maintain output levels on the downwards sloping portion of the marginal cost curve reduce output Flag this Question Question 12 2 pts Which of the following is most likely to be a monopoly? Group of answer choices local fast-food restaurant local bathroom fixtures shop local television broadcaster local electricity distributor Flag this Question Question 13 2 pts What is an example of a natural monopoly? Group of answer choices Market size Diseconomies of scale Economies of scale Flag this Question Question 14 2 pts The slope of the demand curve for a monopoly firm is Group of answer choices upward-sloping. downward-sloping. horizontal, parallel to the x-axis. vertical, parallel to the y-axis. Flag this Question Question 15 2 pts A monopoly sees the demand curve as ________ while a perfectly competitive firm perceives its demand curve as ________. Group of answer choices horizontal; upward-sloping flat; downward-sloping upward-sloping; flat downward-sloping; horizontal Flag this Question Question 16 2 pts Monopolists will earn the most profit by producing Group of answer choices where total revenue is farthest above total cost. where total cost in the lowest. where total revenue is highest. Flag this Question Question 17 2 pts When does price discrimination take place? Group of answer choices A business charges different prices to different customers based on their willingness to pay. A business conceals its pricing policies. A monopoly enters a market with high-income customers. Flag this Question Question 18 2 pts A utility for water is a natural monopoly in the local market. What is the optimal action to take when looking at keeping a competition policy for a the water utility? Group of answer choices Set the price at the breakeven point. Set the price where AC crosses the demand curve. Set the price below the average cost of production. Flag this Question Question 19 2 pts In a monopolistically competitive market, the rule for maximizing profit is to set MR = MC, which means Group of answer choices price is lower than marginal revenue. price is higher than marginal revenue. price is equal to marginal cost. price is equal to marginal revenue. Flag this Question Question 20 2 pts When a new firm enters a monopolistically competitive industry, Group of answer choices the perceived demand and marginal revenue curves for each incumbent firm will shift to the left. the marginal revenue curves for each incumbent firm will shift to the right. the perceived demand and marginal revenue curves for each incumbent firm will shift to the right. the perceived demand curve for each incumbent firm will shift to the right. Flag this Question Question 21 2 pts Within a monopolistically competitive industry, it would be expected that Group of answer choices in the long-run, a typical firm's price is greater than their average cost. firms make zero economic profit in the long-run. firms will make a positive economic profit in the long-run. Flag this Question Question 22 2 pts How are perfect competition and monopolistic competition different? Group of answer choices Items sold within monopolistic competition have more variation in their characteristics. Economic profit is more than zero for perfectly competitive firm, but is zero for monopolistic competitors. Economic profit is not positive for perfect competitors, but it is for monopolistic competitive firms. The resources in a society are under-allocated to production within a perfectly competitive industry. Flag this Question Question 23 2 pts ________ is firms' ability to make the same pricing decisions without consulting each other. Group of answer choices Implicit collusion Malfeasance Price fixing Flag this Question Question 24 2 pts If oligopoly firms decide to work together, either formally or informally, and honor the agreement then profits can be ________ by ________ output and ________ the price of goods and services. Group of answer choices maximized; reducing; increasing maximized; increasing; increasing minimized; reducing; increasing Flag this Question Question 25 2 pts Why do economists use game theory to explain oligopolies? Group of answer choices Oligopolies are complex and varied and game theory allows economists to model different variations of competition and cooperation. Game theory allows economists to mimic the same simplicity of oligopolies. Game theory allows economists to study consumer reaction to product choices in an economy. Flag this Question Question 26 2 pts A positive externality arises when a third party, outside the transaction, ________. Group of answer choices benefits from a market transaction fails to allocate resources efficiently pays a pollution tax to balance social costs Flag this Question Question 27 2 pts Which of the following are examples of economic activities with negative externalities? Group of answer choices A manufacturing company contracting with a landfill to collect its waste products. A gold mine discharging arsenic into a natural lake that it's using for a tailings pond. A paper mill paying for lumber to make paper. Flag this Question Question 28 2 pts The supply curve in the market is higher than optimum if Group of answer choices There are external costs not accounted by the market. There are external benefits not accounted by the market. This is a public good market. Flag this Question Question 29 2 pts Externalities lead to greater Group of answer choices efficiency in markets because the market includes only cost and benefits imposed directly on the businesses only. inefficiency in markets because a market will include cost or benefits imposed on third parties by activity in that market. inefficiency because a market will ignore cost or benefits imposed on third parties by activity in that market. efficiency in markets because a market will include cost or benefits imposed on third parties by activity in that market. Flag this Question Question 30 2 pts A public good is a good that is ________, and thus is difficult for market producers to sell to individual consumers. Group of answer choices excludable or rivalrous excludable and rivalrous nonexcludable and nonrivalrous unexcludable or unrivaled Flag this Question Question 31 2 pts What typically happens with common goods? Group of answer choices Usually the government does a poor job of efficiently managing them so they are exploited. They are usually poorly managed and overused because property rights lack clarity and removes incentives for efficient management of the goods. They are usually efficiently managed because distinctly understood property rights incentivises efficient management of the goods