|Q1. At the point of maximum profit, marginal revenue equals
a. variable cost
b. fixed cost
c. average total cost
d. marginal cost
Q2. The principle which states that as more and more units of a variable resource are added to a set of fixed resources, the resulting additions to output eventually become increasingly smaller, is the principle of
a. increasing production
b. functioning production
c. diminishing marginal returns
d. increasing returns to scale
Q3. An example of an implicit cost is
d. forgone interest when investing one's savings in one's own business
Q4. Marginal cost crosses the
a. AVC curve at the highest point of the AVC curve
b. ATC curve at the lowest point of the ATC curve
c. AFC curve at the lowest point of the AFC curve
d. ATC curve at the highest point of the ATC curve
Q5. Average total cost is equal to total cost divided by marginal product.
Q6. As output increases, the AVC
c. remains the same
d. falls and then rises
Q7. As output increases, marginal cost increases, reaches a maximum, and then falls.
Q8. If the accounting profit equals $200,000 and implicit costs equal $40,000, the economic profit equals
Q9. Total cost is equal to
a. TFC + TVC
b. TFC – TVC
Q10. The amount of payment necessary to attract a given productive resource away from its best alternative use is the
a. resource cost
b. opportunity cost
c. overhead cost
d. variable cost
Q11. The marginal cost curve crosses the average total cost curve at the
a. highest level of average total cost
b. lowest level of average total cost
c. point where the ATC equals the AVC
d. point where the ATC equals the AFC
Q12. The average product decreases any time the marginal product is decreased.
Q13. If the entry of new firms substantially raises demand for resources, two forces tend to eliminate economic profit in the long run: upward pressure on cost and downward pressure on price.
Q14. Elaine's firm is in a perfectly competitive industry. Why doesn't Elaine try to sell more of her product by lowering its price below the market price?
a. her demand curve is not elastic
b. doing so would be considered unethical price chiseling
c. her competitors would not allow it
d. she can sell all she wants at the market price
Q15. In the long run, under conditions of perfect competition, economic profits are eventually eliminated.
Q16. A high degree of competition is not always feasible in the production of
d. public utilities
Q17. Any time market price is below AVC for all output levels, the firm can reduce its losses by shutting down.
Q18. A prime example of perfect competition is the U.S. auto industry.
Q19. If the entry of new firms in a perfectly competitive industry substantially increases the market demand for resources,
a. this reduces the market price of resources
b. this raises the market price of resources
c. the market price of resources does not change
d. this lowers the ATC curves of individual firms
Q20. If a firm is producing an output level for which the market price exceeds the firm's marginal cost,
a. consumers would be willing only to pay a price lower than what it costs the firm to produce another unit
b. consumers would be willing only to pay a price equal to what it costs the firm to produce another unit
c. consumers would be willing to pay a price greater than what it costs the firm to produce another unit
d. consumers would be willing only to pay a price equal to or lower than what it costs the firm to produce another unit
Q21. Under conditions of perfect competition, profits can get squeezed out because of a
a. rising ATC curve
b. higher AR curve
c. higher MR curve
d. lower ATC curve
Q22. Under conditions of perfect competition, maximum profit or minimum loss occurs at the point where
a. AR = ATC
b. MR = AR
c. AR = MC
d. AVC = ATC
Q23. As long as economic profits are being made, new firms will enter a perfectly competitive industry.
Q24. Producer surplus is the difference between the price the firm is willing to sell its goods and the price it actually receives.
Q25. A kinked demand curve is most likely to occur when other firms
a. follow any change in price by a rival firm
b. engage in collusive practices
c. follow a downward change in price but not an upward change by a rival firm
d. ignore any change in price by a rival firm
Q26. The maximum profit of a monopolist occurs
a. where AR equals MC
b. at the lowest point of the MC curve
c. where MR equals MC
d. at the widest gap between AR and MC
Q27. A cartel is
a. a type of formal collusion
b. a type of informal collusion
c. characterized by a kinked demand curve
d. a form of monopolistic competition
Q28. A four-firm concentration ratio indicates the number of firms in the industry.
Q29. One company that retained its monopoly position for years through control of raw materials was
a. Aluminum Company of America (ALCOA)
b. Proctor & Gamble
c. Ford Motor Company
d. U.S. Steel
Q30. The first act to declare monopolies illegal in the United States was the
a. Sherman Antitrust Act
b. Clayton Act
c. Federal Trade Commission Act
d. Robinson-Patman Act
Q31. If a firm in monopolistic competition is neither making a profit nor suffering a loss, its AR curve is
b. touching its AVC curve
c. touching its ATC curve
d. below its MR curve
Q32. A kinked demand curve is associated with
a. perfect competition
b. monopolistic competition
c. an oligopoly
d. public utilities
Q33. All firms in monopolistic competition must sell at the same price.
Q34. Oligopolies always produce differentiated products.
Q35. The demand for the product of a monopolist is perfectly inelastic.
Q36. In the long run, economic profits tend to be eliminated under conditions of monopolistic competition.
Q37. A firm that is a price maker can
a. limit output and raise prices
b. ignore the law of demand
c. ignore the elasticity of the demand for the product
d. both (a) and (c)
Q38. A balanced federal budget may affect the composition of total output by replacing private spending with government spending.
Q39. An increase in planned savings always results in an increase in planned investment.
Q40. The total payment of resource income in the economy is equal to the total value of the output.
Q41. Inventory accumulation occurs whenever
a. output is less than spending
b. output exceeds spending
c. investment exceeds saving
d. a deficit budget occurs
Q42. If exports exceed imports during a period of full employment (while other planned injections equal other planned leakages), the economy
a. remains stable
c. experiences rising prices
d. experiences falling prices
Q43. To have an increase in investment, consumption must decrease.
Q44. Accumulation and depletion of inventories affect the circular flow of income.
Q45. During a period of unemployment, a deficit budget will most likely have which of the following effects on business activity?
a. increase total output
b. cause prices to rise
c. have a neutral effect
d. cause prices and total output to fall
Q46. If the government finances its spending through taxes which absorb idle funds that were not going to be spent by the private sector, a balanced budget can have an expansionary effect.
Q47. Which of the following are injections into the circular flow of income?
a. saving, investment, exports, and taxes
b. investment, taxes, and imports
c. saving, taxes, and imports
d. investment, government spending, and exports
Q48. If total spending is less than the total production of goods and service, all the goods produced can be cleared from the market by
a. raising prices
b. accumulating inventories
c. lowering prices
d. reducing inventories
Q49. A balanced federal budget
a. cannot have any effect on the economy's total output
b. is most likely to decrease total output by substituting government spending for private spending
c. may alter the composition of total output by substituting government spending for private spending
d. can never have an expansionary effect on total output
Q50. Total output and the price level may decline simultaneously.
|Due By (Pacific Time)||07/21/2015 12:00 am|
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