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MICRO FALL 2012 MIDTERM 2
Terms in this set (23)
Gil can continue either pens or milkshakes. Both pens and milkshakes sell for $3. Gil finds that when his income is spent, his marginal utility of pens will be 10 while his marginal utility of milkshakes will be 8. Gil can increase his utility while violating his budget by consuming
more pens and fewer milkshakes
Which of the following is true for a single-prince monopolist?
P > MR
A perfectly competitive firm uses only capital and labor to produce its output. Barriers to entry
do not exist.
The figure above shows Bobby's budget line. The price of a can of a cat food is $2. Bobby's income per week is
$40 (take the price and multiply by the endpoint)
A firm's average cost is $50, its fixed cost is $200, and its output is 10 units. Its variable cost is
more than $201.
ATC = TC/Q
A perfectly competitive firm incurs an economic loss but continues to operate if
P < ATC and P > AVC
Which of the following results in a parallel shift outward of your indifference curves between gasoline and movie rentals?
None of the above lmao
When regulated with a margin cost pricing rule, a regulated natural monopoly
incurs an economic loss and there is no deadweight loss
If a perfectly competitive firm's marginal cost curve shifts upward and the price does not change, then the quantity of output the firm produces
the amount of a tax paid by the demanders will be larger
the more inelastic the demand and the more elastic the supply
Which of the following forms of business organization have limited liability?
firms produce where
where MR and MC cross for quantity / where D and ATC cross for price
Firms that can price discriminate do so to
increase their profit
A company raises its dividend and the price of a share of its stock rises. Its earnings do not change. As a result, its PE ratio _ and its dividend yield _.
rises; might rise, fall, or not change
The firms in a perfectly competitive market are incurring an economic loss. As some firms exit the market, the market supply curve shifts _, the price _, and each firm's economic loss _.
leftward; rises; shrinks
Which of the following is a fixed cost for manufacturing?
the annual fire and theft insurance premiums
When comparing a perfectly competitive market to a single-price monopoly with the same costs, which of the following statements about the monopoly is correct?
creates less consumer surplus, creates a deadweight loss
New technology results in a decrease in the ATC and...?
the quantity produced by the market increases and the price of the product falls
The fact that there are large barriers to entry in a monopoly industry is the reason why a firm in this industry
is able to make an economic profit in the long run
Imposing a tax on a product _ the amount of consumer surplus and _ the amount of producer surplus
A monopoly firm
can increase the price it charges only if it is willing to decrease the quantity it sells
A perfectly competitive firm is producing at the point where its marginal cost equals its marginal revenue. If the firm boosts its output, its total revenue _, its fixed cost_, its variable cost _, and its total cost _.
rises; does not change; rises; rises
As a consumer moves downward along their indifference curve, the
consumer remains indifferent among the different combination of goods.
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