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Pure competition, implicit costs, explicit costs. etc.

Which of the following constitutes an implicit cost to the Johnston Manufacturing Company?

Depreciation charges on company owned equipment

Implicit and explicit costs are different in that

the former refer to non-expenditure costs and the latter to out-of-pocket costs.

Implicit costs are:

nonexpenditure costs

Economic profits are calculated by subtracting

Explicit and implicit costs from total revenue

The basic characteristics of the short run is that

the firm does not have sufficient time to change the size of its plant

Which of the following is a short run adjustment?

A local bakery hires two additional bakers

To an economist 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 one resource is fixed.

The short run is characterized by

at least one fixed resource

The long run is characterized by

The ability of the firm to change its plant size

If a variable input is added to some fixed input beyond some point the resulting extra output will decline. This statement describes

the law of diminishing returns

Fixed cost is:

any cost which does not change when the firm changes its output

Which of the following is most likely to be a fixed cost?

Property insurance premiums

Which of the following is most likely to be a variable cost?

Fuel and power payments

If you operated a small bakery, which of the following would be a variable cost in the short run?

Baking supplies (flour, salt, etc.)

Marginal cost is the

change in total cost that results from producing one more unit of output

Average fixed cost

declines continually as output increases

If a firm decides to produce no output in the short run, its cost will be

its fixed cost

Fixed costs are associated with

the short run only

Total cost minus total variable cost equals

total fixed cost

In the long run

all costs are variable costs

Diseconomics of scale

pertain to the long run

Which of the following industries most closely approximates pure competition?

agriculture

Economists use the term imperfect competition to describe

those markets which are not purely competitive

A purely competitve seller is

a "price taker"

The demand schedule or curve confronted by the individual purely competitive firmis

perfectly elastic

A perfectly elastic demand curve implies that the firm

can sell as much output as it chooses at the existing price

Marginal revenue for a purely competitive firm

is equal to price

Firms seek to mazimize

total profit

If a purely competitive firm shuts down in the short run

it will realize a loss equal to it total fixed costs.

In the short run a purely competitive seller will shut down if product price

is less the AVC

A purely competitive firm's short-run supply curve

its marginal cost curve above average variable cost.

A constant cost industry is one in which

resource prices remain unchanged as output is increased

Under pure competition i the long run

both allocative efficiency and productive efficiency are achieved.

Pure monopoly means:

a single firm producing a product for which there are no close substitutes.

Which of the following is correct?

A purely competitive firm is a "price taker," while a monopolist is a "price maker."

A pure monopolist is:

a one-firm industry

In the short run, a monopolist's economic profits:

may be positive or negative depending on market demand and cost.

There is some evidence to suggest that X-inefficiency is:

more likely to occur in monopolistic firms than in competitive firms

Monopolistic competition means:

many firms producing differentiated products.

Under monopolistic competition entry to the industry is:

more difficult than under pure competition but not nearly as difficult as under pure monopoly.

The restaurant, legal assistance, and clothing industries are each illustrations of:

monopolistic competition.

In the short run a monopolistically competitive firm's economic profit:

may be positive, zero, or negative.

The term oligopoly indicates:

a few firms producing either a differentiated or a homogeneous product.

In an oligopolistic market:

products may be standardized or differentiated.

The automobile, household appliance, and automobile tire industries are all illustrations of:

differentiated oligopoly.

The copper, aluminum, cement, and industrial alcohol industries are examples of:

homogeneous oligopoly.

Which of the following is the best example of oligopoly?

automobile manufacturing

Homogeneous oligopoly exists where a small number of firms are:

producing virtually identical products.

Which of the following is a unique feature of oligopoly?

mutual interdependence

Concentration ratios measure the:

percentage of total sales accounted for by the four largest firms in the industry.

If the four-firm concentration ratio for industry X is 80:

the four largest firms account for 80 percent of total sales

An industry having a four-firm concentration ratio of 85 percent

is an oligopoly.

OPEC provides an example of:

an international cartel.

The Clayton Act of 1914:

outlawed price discrimination, tying contracts, intercorporate stockholding, and interlocking directorates that lessen competition.

The Sherman Act was designed to:

make monopoly and acts that restrain trade illegal.

The function of investigating instances of fraudulent advertising has been assigned to the:

Federal Trade Commission

Which of the following gave the Federal Trade Commission responsibility to protect the public against false and misleading advertising?

Wheeler-Lea Act of 1938

The basic issue in the DuPont cellophane case was:

defining the relevant market.

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