Assignment 6

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Question 1 (1 point)

Profit

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
is measured differently by economists and accountants
is the difference between total revenue and total costs
All of these
None of these

Question 2 (1 point)

To an economist, total cost

is total accounting cost except for fixed costs
does not include accounting costs
is total accounting cost except for variable costs
is accounting cost plus opportunity costs not measured in accounting costs
equals accounting costs for a firm, but not for an entire industry

Question 3 (1 point)

According to the text, a negative economic profit

means that the firm has not earned sufficient revenue to pay for the opportunity costs of the capital it uses
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
means that the firm has not earned sufficient revenue to pay for the opportunity costs of all of the resources it uses excluding debt
means that the firm has not earned sufficient revenue to pay for the opportunity costs of all of the resources it uses
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

a zero economic profit sends a warning to investors not to invest more
a positive economic profit sends a warning to investors not to invest more
a negative economic profit sends a signal to investors that now is the time to invest more
warning other companies to stay out of the market
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

firms maximize capital productivity
firms maximize profit
firms maximize revenue
firms maximize market share
firms maximize labor production

Question 6 (1 point)

Normal profits refer to

the accounting profit that would correspond to zero economic profit
zero accounting profits
variable costs
positive economic profits
fixed costs

Question 7 (1 point)

To determine if a profit potential exists, the firm must examine

the difference between accounting revenue and economic revenue
the demand for the firm's product
the costs of supplying the product
All of these
Both b. and c

Question 8 (1 point)

In the figure above, what is the total cost of producing an output of 140?

$40
$55
$300
$5,600
$7,700

Question 9 (1 point)

In the figure above, what is marginal revenue at a quantity of 120 if the firm maximizes profits at a quantity of 120?

$35
$40
$55
$4,200
Cannot be determined from the information given

Question 10 (1 point)

The profit-maximizing rule is:

total costs = total revenue
normal profit = economic profit
marginal revenue = marginal profit
marginal cost = marginal revenue
total revenue = total costs

Question 11 (1 point)

Using the table above, profit is maximized when the firm produces the

fourth unit of output
fifth unit of output
sixth unit of output
eighth unit of output
ninth unit of output

Question 12 (1 point)

If the demand curve shifts to the right, then total revenue

will always equal total cost
will increase at a given price
will decrease at a given price
may increase or decrease at a given price depending on the price elasticity of demand
will be constant

Question 13 (1 point)

Refer to the figure above. If the current production level is 90 and the firm wishes to maximize profit, it should

decrease the quantity produced to 35
increase production until MR = MC
leave the current production level unchanged
decrease the quantity produced to 50
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?

Product differentiation
How difficult it is for new firms to start up
Number of firms in the industry
Ease of entry
Short-run profitability

Question 15 (1 point)

Ceteris paribus means

everything else held constant
I came, I saw, I purchased
all you need is love
let the buyer beware
money doesn't buy happiness

Question 16 (1 point)

In perfectly competitive markets,

the number of firms is large
the product is homogeneous
buyers and sellers have adequate information
there is ease of entry into the market and exit from the market
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

a large number of small firms that supply electricity
electric utility firms typically have a large advertising budget
the existing firm is the only supplier of the product
there are no barriers to entry
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

ease of entry
degree of government regulation
product differentiation
large number of firms
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:

a price increase will likely drive every customer for the producer of this product to another product
firms operating in a perfectly competitive market have pricing power
any firm can determine the price at which it sells a product but no firm can determine the quantity it produces
it is impossible for any firm to have pricing power
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

a high level of product differentiation
ease of entry and exit
a small number of large, interdependent firms
a large number of small, independent firms
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 November 24, 2009, 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.

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