MC. What should the firm do to maximize its profits?;The;firm should do nothing? it wants to maximize the difference between MR and MC;in order to maximize its profits.;The;firm should increase output.;The;firm should increase price.;The;firm should hire less labor.;Question 45;The law of diminishing returns begins first to affect a;firm's short-run cost structure when;average;variable cost begins to increase.;marginal;cost begins to increase.;average;cost begins to increase.;average;fixed cost begins to decrease.;Question 46;A firm that seeks to maximize its revenue is most likely to;adhere to which of the following?;MR = MC;MR =0;MR MLC, it means that a firm should;use;less labor.;use;more labor.;increase;its fixed capacity.;decrease;its fixed capacity.;Question 50;Which of the following is not true when a monopoly market is;in equilibrium?;Price;MR.;Price =;Average Revenue.;Price;MC.;Consumer;well being would be improved if less resources were allocated to the industry;in which the monopoly operates.;Question 51;If a firm experiences constant returns to the variable input;in the short run;marginal;product and average variable product will be equal over the range of output in;question.;marginal;product will be greater than average variable product, but the two will become;more equal as output increases.;marginal;product will be less than average variable product, but the two will become;more equal as output increases.;marginal;product will be greater than average variable product, and the difference;between the two will become larger as output increases.;Question 52;Which of the following statements about the short-run;production function is true?;MP;always equals AP at the maximum point of MP.;MP;always equals zero when TP is at its maximum point.;TP;starts to decline at the point of diminishing returns.;When MP;diminishes, AP is at its minimum point.;None of;the above is true.;Question 53;Assume the four major grocery stores in a large metropolitan;area decide to meet secretly to fix prices for meat. It would be easiest to;maintain this arrangement when;demand;for meat and fresh vegetables is falling.;individual;firms are able to offer secret price discounts to selected buyers.;the;number of additional competitors is very small.;the;cost conditions for the four firms differ substantially.;Question 54;An implicit cost is defined as;the;amount by which the money spent on an input to production exceeds its;opportunity cost.;the;difference between an input's explicit cost and its actual cost.;the;opportunity cost of using a resource that is not explicitly paid out by the;firm.;the;amount by which economic profit exceeds accounting profit.;Question 55;Financial Risk occurs due to variations in returns which;is;induced by leverage;is due;to the ups and downs of the economy;is due;to changes in government regulations;is a;result of changes in exchange rates;Question 56;If the income elasticity coefficient equals 1, the;proportion of a consumer's income spent on a given product after a change in;income will be _________ the proportion of income spent on that product prior;to the income change.;greater;than;equal;to;less;than;either;greater than or equal to;Question 57;A tax that is imposed as a specific amount per unit of a;product is a(n);sales;or ad valorem tax.;excise;or specific tax.;income;tax.;compound;duty.;Question 58;The derived demand curve for a product component will be;more inelastic;the;larger is the fraction of total cost going to this component.;the;less essential is the component in question.;the;more inelastic is the demand curve for the final product.;the;more elastic are the supply curves of cooperating factors.;Question 59;The fact that the firms in an oligopoly are mutually;interdependent means that each firm;must;consider the reactions of its competitors when it sets the price for its;output.;produces;a product that is similar, but not identical, to the products of its;competitors.;faces a;perfectly elastic demand curve for its product.;produces;a product that is identical to the products of its competitors.;?;Question 60;In the market for pizza, which of the following would cause;a change in quantity supplied, as opposed to a change in supply?;A;decrease in the price of pizzas.;A;decrease in the price of sub sandwiches.;A;decrease in the price of ingredients used to make pizza.;An;increase in the number of pizza restaurants.;?;Question 61;Which of the following statements is false?;Economic;profit is the difference between total revenue and the full opportunity cost of;all the resources used in production.;The;owners of a firm must be compensated for the use of their funds, because those;funds have alternative uses.;Accounting;profit is typically measured as the difference between total revenue and;explicit costs.;Economic;profit is the difference between total revenue and implicit costs.;Question 62;When a firm increased its output by unit, its AFC decreased.;This is an indication that;the law;of diminishing returns has taken effect.;MC;AFC.;AVC;< AFC.;the;firm is spreading out its total fixed cost.;? Moving;to another question will save this response.;Question 63;Much of the empirical evidence on the behavior of costs for;real-world firms suggests that;there;is no relationship between the marginal and average variable costs of production.;for;many firms, marginal and average variable costs are constant over wide ranges;of output.;average;costs functions are U-shaped as suggested by economic theory.;for;most firms, marginal costs are declining in the range in which the firms;operate.;Question 64;The possible alternatives for an oligopoly range from the;monopoly case with ________ to the perfectly competitive case with ________.;low;output, high output;high;output, low output;no;cooperation among the firms, much cooperation among the firms;low;prices, high prices;low;profits, high profits;Question 65;When price is less than average variable cost at the;profit-maximizing level of output, a firm should;shutdown;because it will lose nothing in that case.;shutdown;because it cannot even cover all of its variable costs let alone its fixed;costs if it stays in business.;continue;to produce the level of output at which marginal revenue equals marginal cost;if it is operating in the long run.;continue;to produce the level of output at which marginal revenue equals marginal cost;if it is operating in the short run.;Question 66;Nike is a firm in monopolistic competition. If Nike is;earning an economic profit from new cross-training shoe, over time the demand;for these shoes;increases;as firms exit the market.;does;not change as new firms enter the market.;decreases;as firms exit the market.;decreases;as new firms enter the market.;increases;as new firms enter the market.
Paper#55812 | Written in 18-Jul-2015Price : $22