Econ Final III

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41 terms

A group of firms that produce the same or similar products is

An industry

The most effective form of business organization for raising money to finance the expansion of its facilities and capabilities is a

corporation

Suppose that a business incurred implicit cost of 200,000 ans explicit costs of 1 million in specific year. If the firm sold 4,000 units of output at 300 per unit, its accounting profits were

200,00 and its economic profits were zero

to economists, the main difference between the short run and the long run is that

in the long run all resources are variable, while in the short run at least on resource is fixed

The law of diminishing returns describes the

relationship between resources inputs and product outputs in the the short run

Which of the following is correct

marginal product rises faster than average product and also falls faster than average product

When total product is increasing at a decreasing rate, marginal product is

positive and decreasing

Which of the following statements is correct?

Marginal cost is the price or cost of an extra variable input

In comparing the changes in TVC and TC associated with an additional unit of output, we find that

the changes in TC and TVC are equal

The vertical distance between a firms ATC and AVC curves represents

AFC, which decreases as output increases

A firms total variable cost will depend on

all of these

Economic and diseconomies of scale explain

why the firms long-run average total cost curve is U-shaped

Mutual interdependence would tend to limit control over price in which market model?

Oligopoly

The production of agricultural products such as wheat or corn would best be described by which market model

pure competition

In pure competition, the demand for the product of a single firm is perfectly

Elastic because many other firms produce the same product

in pure competition, marginal revenue is

Equal to product price

In The standard model of pure competition, a profit-maximizing entrepreneur will shut down in the short run if

Total revenue is less than total variable cost

A purely competitive firms output is currently such that its marginal cost is 4 and marginal revenue is 5.Assuming profit maximization, the fir should

Leave price unchanged and rise output

The MR=MC rule applies

to firms in all types of industries

in pure competition, price is determined where the industry

Demand and supply curves intersect

In long-run equilibrium a purely competitive firm will operate where price is

Equal to MR,MC,and minimum ATC

One feature of pure monopoly is that the monopolist is

a price maker

A monopoly is most likely to emerge and be sustained when

Economies of scale are large relative to market demand

the pure monopolist who is nondiscrimination must decrease price on all units of a product sold in order to sell additional units. This explains why

Marginal revenue is less than average revenue

the nondiscriminating pure monopolists demand curve

is the industry demand curve

the supply curve for a monopoly is

nonexistent

Monopolists are said to be allocatively inefficient because

at the profit maximizing output, the marginal benefit to society from increasing output is greater that the marginal cost to society

if a monopolized industry should become purely competitive without any change in cost conditions

price will decrease and quantity produce will increase

Demand and marginal revenue curves are downward sloping for monopolistic competitive firms because

Product difference allows each firm some degree of monopoly power

Which would make an individual firms demand curve less elastic

increased brand loyalty toward the firms product

In the long run, a representative firm in a monopolistic competitive industry will typically

Earn a normal profit but not an economic, but not an economic profit

Monopolistic competition is characterized by excess capacity because

Firms produce at an output level less than the least-cost output

The variety of products and product features which consumers may choose from in monopolistic competitive industries

at least partially offsets the economic inefficiencies of this market structure

The U.S. primary steel industry is best described as a

homogeneous oligopoly

A major prediction of the kinked demand curve model is

Price stability in oligopolies

In the kinked demand model of non collusive oligopoly, each firm thinks that the demand curve below the going price is

Less elastic that the demand curve about the going price

the greater the degree of inequality in the size distribution of income, the more bowed will be the Lorenz curve toward the

Lower right hand corner

when the distribution of income is adjusted for noncash transfers, the income distribution shows

Greater equality

The empirical data indicate that the tax system and the transfer programs of the government

Reduce the degree of inequality in the distribution of income

Since 1970 the distribution of personal income in the United states has

moved toward greater inequality

Social insurance is distinguished from assistance or welfare by the fact

An individual acquires a right to social insurance benefits by meeting objective eligibility criteria while public assistance benefits are determined according to individual need

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