In: Economics
19. To maximize profits, a single-price monopolist will produce where Marginal costs = Marginal revenue: establishing a price that is greater than their marginal cost.
True
False
20. As a consequence of the perfectly competitive firm producing the quantity of output at which: price equals marginal revenue and marginal cost, it will achieve "allocative efficiency" in the deployment of societies scarce resources.
True
False
21. In the "long-run," the perfect competitive achieves technical efficiency and the firm will produce at: P = ATC = LRATC, assuring the consumer that the good or service is provided at the lowest possible price--given a constant state of technology.
True
False
22. Monopoly is never preferable to perfect competitive industry structures.
True
False
23. A cost that is incurred when an actual monetary payment is made by the firm is an "explicit (accounting) cost"--such as the payment of an electric bill or mortgage.
True
False
24. A firm is said to earn "normal profit" when it generates enough revenue to exactly cover its explicit and implicit cost(s) of production.
True
False
25. The MP or MPP (marginal product or marginal physical product) curve rises as the marginal cost curve falls in the area (range) of production subject to "increasing marginal returns."
True
False
26. In the short run, FC ("fixed cost") do not change as the output quantity increases.
True
False
27. In the short run, AFC ("average fixed cost") do not change as the output quantity increases.
True
False
28. As the output quantity continues to increase--moving to the right on the "X" (quantity of production) axis, the average variable cost curve gets closer to the average total cost curve in vertical analysis--reflecting change in the magnitude of the firm's "average fixed cost"--which necessarily, by definition, must continually decrease.
True
False
29. The AVC (average variable cost) equals VC (total variable cost) divided by the level of output (quantity) or "Q." Alternately: AVC = VC / Q.
True
False
30. The "onset of diminishing returns to productivity" causes the marginal product curve to peek and the marginal cost curve to bottom out.
True
False
31. The marginal cost curve, the average total cost curve, and the average variable cost curve are typically "U-shaped" ultimately due to the law of diminishing returns.
True
False
32. The LRATC (long run average total cost) curve is an historic envelop of the developing companies historic ATC curves--generally illustrating initial scale economies followed by constant return to scale and eventually diseconomies of scale (resulting from managerial inefficiency from BIGNESS or bureaucracy.)
True
False
33. Evolving "technology" does not and cannot affect the position of the LRATC curve.
True
False
34. In the long run
there can be no variable costs
all costs are fixed costs
none of these answers are correct
all costs are variable costs
35. If the AVC (average variable cost curve) is falling,
The MC curve must be above it at the level of output under consideration.
The MC curve must be below it at the level of output under consideration.
The MC curve is necessarily rising at the level of output under consideration
The MC curve is necessarily falling at the level of output under consideration.
36. The average-margin rule states that if the marginal magnitude (value) is
greater than the average magnitude, the average magnitude falls.
Rising, the average magnitude is necessarily above it.
Falling, the average magnitude is necessarily below it.
less than the average magnitude (value), the average magnitude falls.
37. The law of diminishing marginal returns to productivity holds for a situation in which
some inputs are variable and at least one input is fixed.
all inputs are variable.
all inputs are fixed.
none of these answers is correct.
38. Long run equilibrium for a perfectly competitive firm occurs when
P > MC > NROI > ATC
MC = MR = P > ATC
P = MC = MR = ATC = LRATC
M = MR = AFC = ATC
39. Which of the following is NOT considered a barrier to entry?
Diseconomies of scale
Government Licenses
Scale Economies
Control over essential resources
Patents
40. The "regulated monopolist" (natural monopoly) will be regulated to where
P = MR
P = AVC
P = MC
P = ATC
19. True because the profit is maximized when MR = MC and the condition is true for all firms.
20. True. Allocative efficiency maximizes producer and consumer surplus when price is equal to marginal cost.
21. True. Minimum efficient scale is achieved when produiction is done at minimum of ATC.
22. False. For certain goods like public utility services, a large single firm that is able to supply the entire market is necessary
23. True
24. True.
Question 25 True. This is because increasing marginal returns are synonymous with decreasing costs where MP, AP are increasing and MC., AC are falling in the given region.
Question 26 True. This is because it represents the cost incurred on fixed factors which do not change with level of output
Question 27 False. Since Q is changing, AFC which is FC/Q also changes.
Question 28 True. Because AFC ultimately falls and so the difference between ATC and AVC gets closer.
Question 29 True
Question 30 True
Question 31 True
Quetsion 32 True
Question 33 False
Question 34 All costs are variable
Question 35 The MC curve must be below it at the level of output under consideration.
Question 36 less than the average magnitude (value), the average magnitude falls.
Question 37 some inputs are variable and at least one input is fixed.
Question 38 P = MC = MR = ATC = LRATC
Question 39 Diseconomies of scale
Question 40 P = ATC