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ECO 561 Week 2 Knowledge Check

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Question;ECO 561 Week 2 Knowledge Check;1.;Purely competitive firms increase total revenue by;A. increasing productionB. decreasing productionC. increasing priceD. decreasing price2. What;are two ways for a competitive firm to determine the optimal level of;production, that is, the level of production that will maximize profit or;minimize losses?;A. Comparing total;revenue to total cost or marginal revenue to marginal costsB. Comparing average;revenue to average costs or marginal revenue to marginal costsC. Comparing average;variable costs to price or marginal revenue to priceD. Comparing total;revenue to average variable costs or price to average variable costs3.;Suppose that a firm determines that its marginal revenue is greater than its;marginal cost, it would be better to;A. increase productionB. decrease productionC. keep production the;sameD. increase price4. It;is profitable for a firm to continue employing additional resources as long as;A. Marginal Revenue;Product >= Marginal Resource CostB. Marginal Revenue;Product = Marginal costD. Marginal Revenue;Product >= Price5. As;additional units are produced, the marginal revenue product falls for all firms;because marginal product decreases. For firms operating in industries that are;not perfectly competitive, marginal revenue product also falls because;A. product price falls;as output increasesB. product price falls;as output decreasesC. product price;increases as output increasesD. product price;increases as output decreases6. All;things being equal, an increase in demand for a product;A. increases demand for;the resources used in its productionB. decreases demand for;the resources used in its productionC. increases the supply;of a productD. decreases the supply;of resources used in its production7.;Marginal cost can be defined as the addition to _____ of one more unit of;output.;A. total variable costsB. average total costsC. average variable;costsD. total fixed costs8. If a;firm stars small and, over time, builds successively larger plant sizes or adds;additional work space in an office, average total costs are most likely to;A. initially decrease;then begin to riseB. initially rise, then;begin to decreaseC. remain constant over;timeD. continually increase9.;Demand for resources, including labor, depend on its;A. productivityB. profitabilityC. availabilityD. accessibility10. The;primary difference between increasing- and decreasing-cost industries lies in;A. fixed-cost;components: only increasing-cost industries have significant fixed costsB. variable-cost;components: only decreasing-cost industries have significant variable;costsC. the fact that the;average total cost (ATC) of firms in increasing-cost industries will first;decline and then eventually increase with output, while decreasing-cost;firms experience progressively lower ATC with increased outputD. efficiency of;production11.;When adding labor or other factors of production, businesses may see their;total product rise, but see their per-unit increase in return for each;additional unit diminish. This phenomenon;A. occurs only for firms;that do not efficiently use their factors of productionB. applies only to;capital-intensive industriesC. is known as;diminishing marginal product and has general market applicationD. depends on how;abundant or scarce labor is in existing factor-markets12. In;the short run, firms should shut down if;A. AVC > PB. ATC > P > AVCC. P > ATCD. P > MC13.;When you are considering the value of a resource in its next best use, you are;considering its;A. opportunity costB. production costC. marginal costD. price14. Of;the four major market structures?perfectly competitive, monopolistic;competition, oligopoly, monopoly?reducing variable costs of production;A. is not a viable;option for perfectly competitive firms? or price-takers?because the;per-unit profit margin is fixed by the equilibrium priceB. can enhance profit;for all but the monopoly firm, which, because it has no competition, has;little financial incentive to lower its per-unit costsC. will result in;significant increases in profit-margin, regardless of market structure, if;coupled with significant increases in product priceD. enhance profit;per-unit, because profit equals revenue minus cost

 

Paper#55346 | Written in 18-Jul-2015

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