Question 32

2pts

Short run refers to a period of time during which:

Group of answer choices

all the factors are constant.

all the factors are variable.

the producer can shift from one plant size to another.

some factors are fixed while some others are variable.

the producer cannot change the level of output.

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Question 33

2pts

Which of the following isnotcorrect for an individual firm?

Group of answer choices

If the average variable cost (AVC) is decreasing, average total cost (ATC) must be decreasing.

AVC reaches minimum before ATC.

If ATC is increasing, AVC must be increasing.

If AVC is increasing, marginal cost (MC) is increasing.

If average fixed cost (AFC) is decreasing, ATC must be decreasing.

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Question 34

2pts

The law of diminishing return does not apply to a firm in the long run because in this phase:

Group of answer choices

all the factors of production are fixed.

there are no fixed factors of production.

there are some fixed and some variable factors of production.

the producer is required to produce a fixed level of output.

the producer can change the level of output only by changing the variable factors, fixed factors remaining unchanged.

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Question 35

2pts

Monopoly is a market structure in which:

Group of answer choices

there are significant barriers to the entry of new firms.

the firms face a perfectly elastic demand curve.

there are a large number of close substitutes for the good produced.

the firms are price takers.

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Question 36

2pts

The profit of a firm is maximized when:

Group of answer choices

marginal revenue is maximum.

marginal revenue is greater than marginal cost.

marginal revenue is equal to marginal cost.

marginal cost is minimum.

marginal revenue is less than marginal cost.

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Question 37

2pts

The addition to a business firm's total costs, that comes from producing one more unit of output, is its:

Group of answer choices

total variable cost.

marginal cost.

sunk cost.

opportunity cost.

total fixed cost

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Question 38

2pts

The demand curve faced by a perfectly competitive firm is:

Group of answer choices

perfectly inelastic.

relatively elastic.

unit elastic.

perfectly elastic.

relatively inelastic.

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Question 39

2pts

Marginal revenue of nthunit of output is:

Group of answer choices

total revenue of (n+1)thunit minus total revenue of nthunit.

total revenue of nthunit minus total revenue of (n-1)thunit.

total revenue of (n+1)thunit minus total revenue of (n-1)thunit.

the sum of total revenue of (n+1)thunit and nthunit.

the sum of total revenue of (n+1)thunit and (n-1)thunit.

Question 41

2pts

When attempting to explain why a consumer purchases a Ford automobile instead of a Honda automobile, or a Compaq computer instead of an IBM computer, an economist would assert:

Group of answer choices

that the consumer is making a decision based on what gives him maximum utility.

that everyone knows Hondas are superior to Fords; the consumer cannot possibly be maximizing his utility.

that everyone knows IBM computers are superior to Compaq computers; the consumer may be maximizing his utility at the margin, but is not maximizing total utility.

that since rationality is bounded by lack of information, a consumer purchases goods based on convenience rather than on utility maximization.

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Question 42

2pts

As a consumer eats additional pieces of pizza, total utility will _____.

Group of answer choices

always keep increasing

always keep decreasing

keep increasing until dissatisfaction sets in

keep decreasing until dissatisfaction sets in

initially keep decreasing until it becomes zero and then increase

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Question 43

2pts

If a dinner guest was serious when she said that she could never get enough of your cooking, you would conclude that the marginal utility of your cooking for her was _____.

Group of answer choices

negative

zero

increasing at an increasing rate

positive

more than total utility

Question 45

3pts

Consider a firm operating in a perfectly competitive market. The firm is producing 60 units of output, has a total fixed cost equal to $162, and is earning $222 economic profit in the short run. If the market price is $11.50 per unit, what is the value of average variable cost at this output level? Show your work.

(Show your work to earn credits. NO WORK, NO CREDIT)

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Question 46

3pts

Assume that a firm's marginal revenue curve intersects the rising portion of the marginal cost curve at 100 units of output. At this output level, a profit-maximizing firm's total fixed cost is $450, average variable cost is $3.50. If the price of the product is $11 per unit, what's this firm's economic profit at its profit-maximizing output level? Show your work.

(Show your work to earn credits. NO WORK, NO CREDIT)

Question 52

2pts

In contrast to both perfect competition and monopolistic competition, an oligopoly market structure is characterized by:

Group of answer choices

a perfectly inelastic demand curve.

the presence of infinite number of firms.

the production of only differentiated products.

difficulty in the entry of new firms.

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Question 53

2pts

In general, the two extreme cases of market structure models are represented by:

Group of answer choices

monopolistic competition and oligopoly.

oligopoly and monopoly.

oligopoly and perfect competition.

perfect competition and monopoly.

perfect monopoly and oligopolistic competition.

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Question 54

2pts

A profit-maximizing firm will produce the level of output at which:

Group of answer choices

average revenue equals average cost.

average revenue equals average variable cost.

marginal revenue equals marginal cost.

marginal cost equals average revenue.

marginal revenue exceeds marginal cost by the maximum amount.

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Question 55

2pts

A(n)____is a price taker.

Group of answer choices

monopoly firm

oligopoly firm

perfectly competitive firm

monopolistically competitive firm

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Question 56

2pts

A monopolistically competitive firm faces a relatively-elastic demand curve as compared to a monopolist firm because of the:

Group of answer choices

presence of a large number of buyers and barriers to entry.

presence of a large number of firms and easy entry into the market.

production of perfectly homogeneous products.

production of unique products and the presence of barriers to entry.

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Question 57

2pts

An industry which has no barriers to entry, no product-promotion strategy, a standardized product, and a very large number of firms operating within it, is said to have:

Group of answer choices

a monopoly market structure.

perfect competition.

monopsonistic competition.

monopolistic competition.

an oligopoly market structure.

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Question 58

2pts

In economic theory, we assume that the goal of the firm is to:

Group of answer choices

maximize sales revenue.

maximize market share.

maximize the benefits it provides to its customers.

maximize the profit.

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Question 59

2.5pts

Dan is currently consuming 10 Cokes and 5 slices of pizza per week such that the marginal utility of the tenth Coke is 12 utils and that of the fifth slice of pizza is also 12 utils. How should Dan redirect his purchases so as to attain consumer equilibrium?

Group of answer choices

He should buy more pizza slices and less Coke.

He should buy fewer pizza slices and more Coke.

He is currently attaining consumer equilibrium and should not redirect his purchases.

He could gain more satisfaction by buying less of both and more of something else.

There is not enough information to answer the question.