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Assignment 6

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Question 1 (1 point)
Profit
  1. is what remains from the value of output once the costs of the inputs used in the production of that output have been fully accounted for
  2. is measured differently by economists and accountants
  3. is the difference between total revenue and total costs
  4. All of these
  5. None of these
Question 2 (1 point)
To an economist, total cost
  1. is total accounting cost except for fixed costs
  2. does not include accounting costs
  3. is total accounting cost except for variable costs
  4. is accounting cost plus opportunity costs not measured in accounting costs
  5. equals accounting costs for a firm, but not for an entire industry
Question 3 (1 point)
According to the text, a negative economic profit
  1. means that the firm has not earned sufficient revenue to pay for the opportunity costs of the capital it uses
  2. means that the firm has not earned sufficient revenue to pay for the opportunity costs of all of the resources it uses after accounting profits have been deducted
  3. means that the firm has not earned sufficient revenue to pay for the opportunity costs of all of the resources it uses excluding debt
  4. means that the firm has not earned sufficient revenue to pay for the opportunity costs of all of the resources it uses
  5. means that the firm has not earned sufficient revenue to pay for the opportunity costs of all of the resources it uses excluding equity
Question 4 (1 point)
According to the text, economic profit serves as a beacon. This means
  1. a zero economic profit sends a warning to investors not to invest more
  2. a positive economic profit sends a warning to investors not to invest more
  3. a negative economic profit sends a signal to investors that now is the time to invest more
  4. warning other companies to stay out of the market
  5. a positive economic profit attracts resources while a negative economic profit sends resources away
Question 5 (1 point)
The assumption economists make about the behavior of firms is that
  1. firms maximize capital productivity
  2. firms maximize profit
  3. firms maximize revenue
  4. firms maximize market share
  5. firms maximize labor production
Question 6 (1 point)
Normal profits refer to
  1. the accounting profit that would correspond to zero economic profit
  2. zero accounting profits
  3. variable costs
  4. positive economic profits
  5. fixed costs
Question 7 (1 point)
To determine if a profit potential exists, the firm must examine
  1. the difference between accounting revenue and economic revenue
  2. the demand for the firm's product
  3. the costs of supplying the product
  4. All of these
  5. Both b. and c
Question 8 (1 point)
Price vs Quantity
In the figure above, what is the total cost of producing an output of 140?
  1. $40
  2. $55
  3. $300
  4. $5,600
  5. $7,700
Question 9 (1 point)
Price vs Quantity
In the figure above, what is marginal revenue at a quantity of 120 if the firm maximizes profits at a quantity of 120?
  1. $35
  2. $40
  3. $55
  4. $4,200
  5. Cannot be determined from the information given
Question 10 (1 point)
The profit-maximizing rule is:
  1. total costs = total revenue
  2. normal profit = economic profit
  3. marginal revenue = marginal profit
  4. marginal cost = marginal revenue
  5. total revenue = total costs
Question 11 (1 point)
Profit Maximization
Using the table above, profit is maximized when the firm produces the
  1. fourth unit of output
  2. fifth unit of output
  3. sixth unit of output
  4. eighth unit of output
  5. ninth unit of output
Question 12 (1 point)
If the demand curve shifts to the right, then total revenue
  1. will always equal total cost
  2. will increase at a given price
  3. will decrease at a given price
  4. may increase or decrease at a given price depending on the price elasticity of demand
  5. will be constant
Question 13 (1 point)
Production Levels
Refer to the figure above. If the current production level is 90 and the firm wishes to maximize profit, it should
  1. decrease the quantity produced to 35
  2. increase production until MR = MC
  3. leave the current production level unchanged
  4. decrease the quantity produced to 50
  5. decrease the quantity produced to 75
Question 14 (1 point)
Which of the following is not one of the bases on which sellers' market structures are typically distinguished?
  1. Product differentiation
  2. How difficult it is for new firms to start up
  3. Number of firms in the industry
  4. Ease of entry
  5. Short-run profitability
Question 15 (1 point)
Ceteris paribus means
  1. everything else held constant
  2. I came, I saw, I purchased
  3. all you need is love
  4. let the buyer beware
  5. money doesn't buy happiness
Question 16 (1 point)
In perfectly competitive markets,
  1. the number of firms is large
  2. the product is homogeneous
  3. buyers and sellers have adequate information
  4. there is ease of entry into the market and exit from the market
  5. All of these
Question 17 (1 point)
Until recently the market structure of the electric utility industry had been that of a monopoly. One of the characteristics that has described this industry historically is
  1. a large number of small firms that supply electricity
  2. electric utility firms typically have a large advertising budget
  3. the existing firm is the only supplier of the product
  4. there are no barriers to entry
  5. firms in the industry are price takers
Question 18 (1 point)
The characteristic that distinguishes a perfectly competitive market from a monopolistically competitive market is
  1. ease of entry
  2. degree of government regulation
  3. product differentiation
  4. large number of firms
  5. market share
Question 19 (1 point)
The terms price maker, price setter, and price searcher are all meant to imply the same thing, which is:
  1. a price increase will likely drive every customer for the producer of this product to another product
  2. firms operating in a perfectly competitive market have pricing power
  3. any firm can determine the price at which it sells a product but no firm can determine the quantity it produces
  4. it is impossible for any firm to have pricing power
  5. a firm operating in any market but perfect competition that also determines the quantity it produces and the price at which it sells the products
Question 20 (1 point)
One characteristic of oligopolistic markets is
  1. a high level of product differentiation
  2. ease of entry and exit
  3. a small number of large, interdependent firms
  4. a large number of small, independent firms
  5. a small number of large, independent firms
Question 1 (4.00 points)
List the characteristics of the perfectly competitive firm, the monopolistically competitive firm, the oligopoly, and the monopoly.
Question 2 (3.00 points)
Since the monopoly has no competitors producing close substitutes, does the monopolist set exorbitantly high prices? Why or why not?
Copyright 2008, by the Contributing Authors. Cite/attribute Resource . admin. (2009, January 27). Assignment 6. Retrieved January 07, 2011, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/economics/introduction-to-microeconomics-1/assignment6.htm. This work is licensed under a Creative Commons License Creative Commons License