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41 terms

Econ Final III

STUDY
PLAY
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