Econ 101 (ch. 9).txt

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egodrunk
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Econ 101 (ch. 9).txt
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2012-04-16 20:22:46
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econ econ101 101
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chapter 9 workbook
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  1. A firm with explicit costs of $2,000,000, no implicit costs, and total revenue of $3,000,000 would have:
    A. a higher accounting profit then economic profit
    B. an accounting profit and an economic profit of $1,000,000
    C. a higher economic profit than an accounting profit
    D. zero accounting profit
    E. zero ecnomic profit
    B. an accounting profit and an economic profit of $1,000,000
    (this multiple choice question has been scrambled)
  2. At which outpout is the firm operating most efficiently?
    Where MC = ATC
  3. The marginal cost curve intersects the ATC curve at its
    A. minimum point, which is the break-even point
    B. maximum point, which is the shut-down point
    C. maximum point, which is the break-even point
    D. minimum point, which is the shut-down point
    A. minimum point, which is the break-even point
    (this multiple choice question has been scrambled)
  4. A profit-maximizing firm will increase production when
    A. price exceeds marginal cost
    B. price exceeds marginal revenue
    C. price is less than marginal cost
    D. price equals marginal cost
    A. price exceeds marginal cost
    (this multiple choice question has been scrambled)
  5. The lowest point on a firm's short-run supply curve is at the
    A. lowest point on the marginal cost curve
    B. break-even point
    C. shutdown point
    D. most profitable output point
    C. shutdown point
    (this multiple choice question has been scrambled)
  6. A firm will operate at that output where MC equals MR
    A. only when it is maximizing its profits
    B. only when it is minimizing its losses
    C. neither when it is maximizing its profits nor minimizing its losses
    D. both when it is maximizing its profits and when it is minimizing its losses
    D. both when it is maximizing its profits and when it is minimizing its losses
    (this multiple choice question has been scrambled)
  7. When marginal cost is rising, but is less than average total cost, we are definitely below the
    A. break-even point
    B. maximum profit point
    C. shut-down point
    A. break-even point
    (this multiple choice question has been scrambled)
  8. Which statement is true?
    A. Accounting profits are euqal to economic profits.
    B. Accouting profits are greater than economic profits.
    C. Ecnomic profits are greater than accoutning profits.
    B. Accouting profits are greater than economic profits.
    (this multiple choice question has been scrambled)
  9. Statement 1: Price is equal to total revenue divided by output. Statement 2: A firm never maximizes profits.
    A. Statement 1 is true, and statement 2 is false.
    B. Statement 2 is true, and statement 1 is false.
    C. Both statements are true.
    D. Both statements are false.
    A. Statement 1 is true, and statement 2 is false.
    (this multiple choice question has been scrambled)
  10. If a firm is producing a level of output at which that output's marginal cost is less than the price of the good, ______
    A. it is producing too much to maximize its profits
    B.it is probably maximizing its profits
    C. higher profits could be obtained with increased production
    d. none of the above
    C. higher profits could be obtained with increased production
    (this multiple choice question has been scrambled)
  11. The firm's long-run supply curve runs along its _____ curve.
    A. AVC
    B. ATC
    C. MC
    D. MR
    C. MC
    (this multiple choice question has been scrambled)
  12. A firm will operate at that output at which MC = MR _______
    A. only in the short run
    B. in both the short run and the long run
    C. in neither the short run not the long run
    D. only in the long run
    B. in both the short run and the long run
    (this multiple choice question has been scrambled)
  13. Statement 1: The firm's short-run supply curve runs up the marginal cost curve from the shutdown point to the break-even point.
    Statement 2: The firm will not accept a price below the break-even pointin the short run.
    A. Statement 2 is true, and statement 1 is false.
    B. Both statements are false.
    C. Statement 1 is true, and statement 2 is false.
    D. Both statements are true.
    B. Both statements are false.
    (this multiple choice question has been scrambled)
  14. A business firm is in the short-run _______
    A. occasionally
    B. rarely
    C. virtually all the time
    D. never
    E. most of the time
    C. virtually all the time
    (this multiple choice question has been scrambled)
  15. If the price is between the shutdown point and the break-even point, the firm is in there __________
    A. short run making a profit
    B. long run making a profit
    C. long run taking a loss
    D. short run taking a loss
    D. short run taking a loss
    (this multiple choice question has been scrambled)
  16. The most efficient output of a firm is located _______
    A. where MC = MR
    B. at the break-even point
    C. at the shut-down point
    D. when the vertical distance between AVC and ATC is at a maximum
    B. at the break-even point
    (this multiple choice question has been scrambled)
  17. Which one of these markets would definitely not be perfectly competetive?
    A. The New York Stock Exchange
    B. Foreign currency
    C. Wheat
    D. HDTVs
    D. HDTV's
    (this multiple choice question has been scrambled)
  18. Perfect competition is _________
    A. the only form of competition in the United States
    B. the prevalent form of competition in the United States
    C. probably impossible to find
    D. found occassionally
    C. probably impossible to find
    (this multiple choice question has been scrambled)
  19. Under perfect competition, _________
    A. many firms have some influence over price
    B. no firm has any influence over price
    C. a few firms have influence over price
    B. no firm has any influence over price
    (this multiple choice question has been scrambled)
  20. Under perfect competition, theere are ________
    A. a few firms producing a differentiated product
    B. a few firms producing an identical product
    C. many firms producing a differentiated product.
    D. many firms producing an identical product
    D. many firms producing an identical product
    (this multiple choice question has been scrambled)
  21. The perfect competitor is __________
    A. a price maker rather than a price taker
    B. a price taker rather than a price maker
    C. neither a price maker or a price taker
    D. a price taker and a price maker
    B. a price taker rather than a price maker
    (this multiple choice question has been scrambled)
  22. ***
    The determination of whether two products are identical ________
    A. is done by the government
    B. is done by market research
    C. takes place in the minds of the buyers
    d is done by the sellers
    C. takes place in the minds of the buyers
    (this multiple choice question has been scrambled)
  23. The perfect competitor's demand curve is _______
    A. sometimes horizontal
    B. always vertical
    C. sometimes vertical
    D. always horizontal
    D. always horizontal
    (this multiple choice question has been scrambled)
  24. Which statement about the perfect competitor is true?
    a. She may charge a little below market price to get more customers.
    b. She may charge a little above market price to imply that her product is superior.
    c. She will always charge the market price.
    d. None of these statements are true.
    c. She will always charge the market price.
  25. Each of the following is a characteristic of perfect competition except _______
    A. many firms
    B. varying prices charged by different firms
    C. perfect mobility
    D. identical products
    B. varying prices charged by different firms
    (this multiple choice question has been scrambled)
  26. In the short run the perfect competitor will probably ______
    A. take a loss or break even
    B. make a profit or take a loss
    C. make a profit or break even
    B. make a profit or take a loss
    (this multiple choice question has been scrambled)
  27. In the long run the perfect competitor will ______
    A. make a profit
    B. break even
    C. take a loss
    B. break even
    (this multiple choice question has been scrambled)
  28. Under perfect competition ______ profits are always zero in the long run.
    A. economic
    B. neither accounting or economic
    C. accounting
    D. both economic and accounting
    A. economic
    (this multiple choice question has been scrambled)
  29. Use the choices below to answer:
    A. in the long run making a profit
    B. in the long run breaking even
    C. in the short run taking a loss
    D. in the short run making a profit
    E. in the short run breaking even
    F. in the long run taking a loss
    D. in the short run making a profit
    (this multiple choice question has been scrambled)
  30. Use the choices below to answer:
    A. in the short run taking a loss
    B. in the long run breaking even
    C. in the long run taking a loss
    D. in the short run breaking even
    E. in the short run making a profit
    F. in the long run making a profit
    B. in the long run breaking even
    (this multiple choice question has been scrambled)
  31. The perfect competitors demand and marginal revenue curves are ______
    A. identical only in the short run
    B. always identical
    C. never identical
    D. identical only in the long run
    B. always identical
    (this multiple choice question has been scrambled)
  32. The most efficient output ______
    A. is always equal to the most profitable output for the perfect competitor
    B. is never equal to the most profitable output for the perfect competitor
    C. is equal to the most profitable output for the perfect competitor only in the short run
    D. is equal to the most profitable output for othe perfect competitor only in the long run
    D. is equal to the most profitable output for othe perfect competitor only in the long run
    (this multiple choice question has been scrambled)
  33. Use Figure 4 to answer

    Total profit is ______
    A. the rectangle bounded by HGJI
    B. is the rectangle bounded by EFGH
    C. cannot be found on this graph
    D. is the rectangle bounded by EFJL
    A. the rectangle bounded by HGJI
    (this multiple choice question has been scrambled)

  34. Output is ______
    A. OL
    B. OM
    C. OK
    D. cannot be found on this graph
    B. OM
    (this multiple choice question has been scrambled)

  35. Profit per unit is _____
    A. FJ
    B. MF
    C. MG
    D. MJ
    E. GJ
    E. GJ
    (this multiple choice question has been scrambled)

  36. The firm's most efficient output is ______
    A. cannot be detwermined on this graph
    B. OL
    C. OK
    D. OM
    B. OL
    (this multiple choice question has been scrambled)
  37. Statement 1: The advent of the Internet has brought "perfect knowledge" clsoer to reality.
    Statement 2: The cost of businesses buying th eir supplies online is convenient, but they generally pay more than they would if they used customary channels.
    A. Both statements are true.
    B. Statement 1 is true, and statement 2 is false.
    C. Statement 2 is true, and statement 1 is false.
    D. Both statements are false.
    B. Statement 1 is true, and statement 2 is false.
    (this multiple choice question has been scrambled)
  38. Statement 1: No firm will stay in business more than one year if it is losing large sums of money.
    Statement 2: Many dot-coms have lost money in the short run.
    A. Statement 1 is true, and statement 2 is false.
    B. Statement 2 is true, and statement 1 is false.
    C. Both statements are false.
    D. Both statements are true.
    B. Statement 2 is true, and statement 1 is false.
    (this multiple choice question has been scrambled)
  39. When an industry is in long-run equilibrium economic profits are ______ and ______ will be entering or leaving the industry.
    A. positive; some
    B. zero; none
    C. positive; none
    D. zero; some
    B. zero; none
    (this multiple choice question has been scrambled)
  40. If a perfectly competitive firm sells 10 units of output at a price of $10 per unit, its marginal revenue per unit is ________
    A. $100
    B. more than $1, but less than $10
    C. more than $10, but less than $100
    D. $1
    E. $10
    E. $10
    (this multiple choice question has been scrambled)
  41. Under perfect competition there are so many firms that no one firm has any influence over ______
    price
  42. The determination that a product is identical takes place in ___________
    the mind of the buyer
  43. The perfect competitor's demand curve is a ________, the marginal revenue curve is a ________
    perfectly elastic horizontal line; the same perfectly elastic horizontal line
  44. A perfect competitor will never charge more than market price because ______; the perfect competitor woudl never charge less than market price because _______.
    he wouldn't sell anything; it would be unnecessary since he could sell all he wanted at the market price.
  45. In the short run the perfect competitor may make a _____ or take a _____; in the long run the perfect competitor will _____
    profit, loss; break even
  46. In a perfectly competitive industry, if firms are making profits _____, which will result in zero profits in the long run; if there are losses in the short run _____, resulting in zero profits (and losses) in the long run.
    new firms enter the industry; some firms will leave the industry
  47. The perfect competitor operates at the _____ point of her average total cost curve in the long run.
    minimum
  48. If the firms in a competitive industry are earning profits, in the long run new firms will _____, but if most firms are losing money, then in the long run some of the firms will _____.
    enter; exit (in perfect competition firms have perfect mobility – ease of entry/exit)
  49. Use figure 5

    How much will output be in the short run if the price is (a) $70? (b) $120? (c) $160?
    • a. 0
    • b. 240
    • c. 280
  50. Use figure 5

    How much is the firm's most efficient output?
    260

  51. If price is $180, how much is total profit?
    • Total profit = (P-ATC)*Q
    • = ($180 - $152)*260
    • = ($28)*260= $7,280

  52. If price is $120, how much is total profit?
    • = ($120 - $153)*240
    • = (-$33)*240
    • = - $7,920 (loss of $7,920)

  53. How much is output at (a) the break-even point? (b) the shut-down point?
    • a. 260
    • b. 200
  54. How much is the lowest price the firm will accept in (a) the short run? (b) the long run?
    • a. 80
    • b. 150

  55. How much is the most efficient output?
    26

  56. a. If the price is $55, how much is the most profitable output?
    b. Calculate total profit.
    • a) 32
    • b) total profit = (P-ATC)*Q
    • = (($55 - $42)*32
    • = ($13)*32= $416

  57. How much is output in the short run if price is (a) $65? (b) $30? (c) $15?
    • a) 34
    • b) 24.5
    • c) 0

  58. If price is $30, what will the firm do in (a) the short run? (b) the long run?
    • a) operate
    • b) go out of business
  59. Label the break-even and shut-down points
    break even point is at the minimum of the ATC and shut down is at the minimum of AVC(which is were MC crosses each curve)
  60. Label the short-run supply curve and the long-run supply curve.
    • The short run supply curve runs along the MC curve from the shut down point up. The long run supply curve runs along the MC curve from the break even point up.
    • Shutdown point at output = 20
    • Break-even point at output = 26

  61. At an output of 14, MC = $50 and ATC = $55. At an output of 15, MC = $65 and ATC = $56. Estimate the ATC at the break-even point.
    these two questions are similar to the one we talked about in class - #13 on the multiple choice questions. $54.50 (must be a little below $55)

  62. At an output of 9, MC = $20 and AVC = $25. At an output of 10, MC = $32 and AVC = $26. What is the lowest price the firm will accept in the short run?
    $24.50 (must be a little below $25)
  63. Fill in the table

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